ABM Industries Incorporated (ABM)
Cash conversion cycle
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | 3.73 | 4.02 | 5.37 | 5.29 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | 14.52 | 14.20 | 15.45 | 17.52 | 16.94 |
| Cash conversion cycle | days | -14.52 | -10.47 | -11.43 | -12.15 | -11.65 |
October 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + — – 14.52
= -14.52
The cash conversion cycle of ABM Industries Incorporated has shown a consistent improvement over the past five years. The company has been able to effectively manage its working capital and optimize its operating cycle, resulting in a shorter cash conversion cycle each year.
The company's cash conversion cycle was -14.52 days as of October 31, 2024, which indicates that ABM Industries Incorporated takes less time to convert its investments in inventory and accounts receivable into cash from sales. This implies efficient management of inventory and accounts receivable, enabling the company to quickly convert its assets into cash.
Moreover, the negative values of the cash conversion cycle indicate that ABM Industries Incorporated operates with a negative working capital cycle, where it receives cash from customers before needing to pay its suppliers. This is a favorable position as it allows the company to fund its operations using its suppliers' resources before paying for them.
Overall, the trend of decreasing cash conversion cycle over the years reflects ABM Industries Incorporated's improving efficiency in managing its working capital and converting its assets into cash, which may positively impact its financial performance and liquidity.
Peer comparison
Oct 31, 2024