Because of the seasonality in some businesses, the CCC for the TTM period may not be strictly comparable to the fiscal-year periods shown in the chart. Even the steadiest-looking businesses on an annual basis will experience some quarterly fluctuations in the CCC. To get an understanding of the usual ebb and flow at Microsemi Corporation (NASDAQ:MSCC), consult the quarterly-period chart below.
Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.
On a 12-month basis, the trend at Microsemi looks very good. At 134.2 days, it is 23.5 days better than the five-year average of 157.7 days. The biggest contributor to that improvement was DPO, which improved 18.6 days compared to the five-year average. That was partially offset by a 0.6-day increase in DSO.
Considering the numbers on a quarterly basis, the CCC trend at Microsemi Corporation (NASDAQ:MSCC) looks OK. At 145.6 days, it is 10.8 days worse than the average of the past eight quarters. Investors will want to keep an eye on this for the future to make sure it doesn’t stray too far in the wrong direction. With quarterly CCC doing worse than average and the latest 12-month CCC coming in better, Microsemi gets a mixed review in this cash-conversion checkup.
Though the CCC can take a little work to calculate, it’s definitely worth watching every quarter. You’ll be better informed about potential problems, and you’ll improve your odds of finding underappreciated home run stocks.
The article How Fast Is the Cash at Microsemi? originally appeared on Fool.com.
Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned.
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