Archer-Daniels-Midland Company (ADM)
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 | 50.50 | 57.36 | 66.68 | 71.37 | 55.31 |
| Days of sales outstanding (DSO) | days | 16.44 | 17.70 | 14.31 | 16.05 | 12.97 |
| Number of days of payables | days | 26.66 | 30.30 | 29.42 | 27.26 | 22.60 |
| Cash conversion cycle | days | 40.28 | 44.77 | 51.58 | 60.15 | 45.69 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 50.50 + 16.44 – 26.66
= 40.28
The cash conversion cycle, a metric indicating how efficiently a company manages its working capital, for Archer-Daniels-Midland Company has shown fluctuations over the past five years.
In 2023, the company's cash conversion cycle stood at 40.28 days, showing an improvement from the previous year's figure of 44.77 days. This suggests that the company has become more effective in managing its cash, inventory, and receivables, leading to a quicker conversion of investments in raw materials to cash from sales.
Comparing to 2021 and 2020, where the cash conversion cycle was 51.58 days and 60.15 days, respectively, the company has significantly improved its operational efficiency in converting its resources into cash.
However, the cash conversion cycle in 2019 was relatively better at 45.69 days compared to 2023. This indicates that the company may have experienced some challenges in managing its working capital in the most recent year.
Overall, Archer-Daniels-Midland Company has shown positive progress in shortening its cash conversion cycle over the years, indicating improved efficiency in managing its cash flows and working capital.
Peer comparison
Dec 31, 2023