UFP Technologies Inc (UFPT)

Cash conversion cycle

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	74.11	75.49	68.65	61.72	61.50	67.38	72.89	73.67	63.49	43.83	44.29	43.16	40.22	41.23	43.41	40.66	36.94	38.53	38.45	39.55
Days of sales outstanding (DSO)	days	59.24	57.53	61.06	57.16	56.18	69.43	76.10	73.71	69.66	60.70	60.71	61.10	53.89	55.39	52.37	55.07	52.87	56.77	57.01	56.05
Number of days of payables	days	23.53	29.16	27.36	22.29	22.93	26.16	33.80	26.66	20.15	15.28	17.49	12.89	8.89	9.62	11.21	15.14	9.25	13.68	11.91	12.29
Cash conversion cycle	days	109.82	103.87	102.35	96.60	94.75	110.65	115.19	120.72	113.01	89.25	87.52	91.37	85.22	87.00	84.56	80.59	80.56	81.62	83.55	83.32

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 74.11 + 59.24 – 23.53
= 109.82

The cash conversion cycle is a financial metric that measures how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle indicates that the company is able to efficiently manage its working capital and generate cash.

Based on the data provided for UFP Technologies Inc, we observe fluctuations in the cash conversion cycle over time. The company's cash conversion cycle ranged from 80.56 days to 120.72 days over the past five years, with a general trend of slight improvement in recent quarters.

In the most recent quarter, ending December 31, 2023, UFP Technologies Inc had a cash conversion cycle of 109.82 days, indicating that it took the company approximately 110 days to convert its investments in inventory and other resources into cash flows. This suggests that UFP Technologies Inc may have experienced inefficiencies in managing its working capital during this period.

Analyzing the trend over multiple quarters, we note that there has been some variability in the cash conversion cycle, with periods of both improvement and deterioration. However, the company should aim to consistently reduce its cash conversion cycle to improve efficiency and maximize liquidity.

Overall, a detailed review of UFP Technologies Inc's operational and financial strategies may be necessary to identify the specific factors influencing the cash conversion cycle and to implement measures to optimize working capital management and enhance overall financial performance.