Archer-Daniels-Midland Company (ADM)
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 | 52.96 | 50.50 | 57.19 | 66.68 | 71.37 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 52.96 | 50.50 | 57.19 | 66.68 | 71.37 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 52.96 + — – —
= 52.96
Archer-Daniels-Midland Company's cash conversion cycle has shown a decreasing trend over the past five years, from 71.37 days at the end of 2020 to 52.96 days at the end of 2024. This indicates that the company has been managing its working capital more efficiently over the years.
A decreasing cash conversion cycle suggests that the company is taking less time to convert its investments in inventory into cash receipts from customers. This could be due to improvements in inventory management, quicker collection of accounts receivable, or extending payment terms to suppliers.
A shorter cash conversion cycle generally indicates better liquidity and operational efficiency. However, it's essential for the company to strike a balance between speeding up the collection of cash and maintaining good relationships with customers and suppliers.
Overall, the decreasing trend in Archer-Daniels-Midland Company's cash conversion cycle is a positive sign of improved working capital management and efficiency in its operations.
Peer comparison
Dec 31, 2024