American Airlines Group (AAL)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	26.86	25.05	23.83	25.30	28.65
Days of sales outstanding (DSO)	days	13.52	14.69	16.61	19.56	30.45
Number of days of payables	days	24.99	24.56	22.47	24.98	21.23
Cash conversion cycle	days	15.38	15.18	17.97	19.89	37.87

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 26.86 + 13.52 – 24.99
= 15.38

The cash conversion cycle of American Airlines Group has shown a positive trend over the past five years. From 37.87 days in December 2020, the cycle has decreased consistently to 15.38 days by December 2024. This indicates that the company has improved its efficiency in managing its cash flow from operations, accounts receivable, and accounts payable.

A shorter cash conversion cycle implies that American Airlines Group is able to collect cash from customers, convert inventory into sales, and pay suppliers more quickly. This can be seen as a positive sign of effective working capital management and liquidity. The decreasing trend in the cash conversion cycle suggests that the company is operating more efficiently and effectively in terms of its cash flow management.