Alcoa Corp (AA)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 77.21 | 83.61 | 83.11 | 62.11 | 58.03 |
| Days of sales outstanding (DSO) | days | 28.10 | 26.92 | 27.09 | 22.25 | 23.40 |
| Number of days of payables | days | 61.33 | 60.53 | 71.13 | 62.33 | 52.38 |
| Cash conversion cycle | days | 43.99 | 50.00 | 39.07 | 22.03 | 29.05 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 77.21 + 28.10 – 61.33
= 43.99
The cash conversion cycle of Alcoa Corp has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 44.47 days, indicating a decrease from the previous year's 50.59 days. This shows that Alcoa has become more efficient in managing its working capital and converting its inventory and receivables into cash.
Comparing the 2023 figure to 2021 and 2022, we see an increase in the cash conversion cycle, signifying that the company took longer to convert its resources into cash during those years. However, when compared to 2020 and 2019, the 2023 cash conversion cycle is still higher, reflecting a potential slowdown in the efficiency of Alcoa's working capital management compared to those earlier years.
Overall, while the company has shown improvement in efficiency compared to the previous year, there may be room for further enhancement based on the historical trend of the cash conversion cycle. Efficient working capital management is essential for maintaining liquidity and optimizing cash flows within the company.
Peer comparison
Dec 31, 2023