Archer-Daniels-Midland Company (ADM)
Cash conversion cycle
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 50.50 | 45.85 | 47.04 | 57.22 | 57.36 | 53.13 | 60.50 | 75.43 | 66.68 | 54.76 | 60.10 | 73.68 | 71.37 | 54.73 | 46.39 | 53.58 | 55.31 | 48.92 | 51.02 | 54.51 |
| Days of sales outstanding (DSO) | days | 16.44 | 16.74 | 15.02 | 16.00 | 17.70 | 17.30 | 20.64 | 17.17 | 14.31 | 17.29 | 16.94 | 17.48 | 16.05 | 15.23 | 14.66 | 13.83 | 12.97 | 12.73 | 14.02 | 14.32 |
| Number of days of payables | days | 26.66 | 21.45 | 20.07 | 24.29 | 30.30 | 26.17 | 23.39 | 26.76 | 29.42 | 22.64 | 18.07 | 23.15 | 27.26 | 20.91 | 17.62 | 20.87 | 22.60 | 18.01 | 18.87 | 21.56 |
| Cash conversion cycle | days | 40.28 | 41.13 | 41.99 | 48.93 | 44.77 | 44.26 | 57.74 | 65.84 | 51.58 | 49.42 | 58.97 | 68.00 | 60.15 | 49.05 | 43.43 | 46.54 | 45.69 | 43.64 | 46.17 | 47.27 |
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 of Archer-Daniels-Midland Company has shown some fluctuations over the past several quarters. The cash conversion cycle represents the time it takes for the company to convert its investments in inventory and accounts receivable into cash inflows from customers.
Analyzing the data provided, we observe that the cash conversion cycle for Archer-Daniels-Midland Company ranged from a low of 40.28 days to a high of 68.00 days over the past two years. A lower cash conversion cycle indicates that the company is efficiently managing its cash flow and working capital, while a higher cycle suggests inefficiencies that may tie up capital in inventory and trade receivables for a longer period.
It is notable that the cash conversion cycle fluctuated, indicating potential challenges in managing inventory levels and collecting receivables efficiently during some quarters. A longer cash conversion cycle, as seen in some quarters, may require additional financing to fund operations during the extended period between cash outflows for inventory and cash inflows from sales.
Overall, it is essential for Archer-Daniels-Midland Company to strive for a consistently low cash conversion cycle to optimize its working capital management, improve cash flows, and enhance overall financial performance. Tracking and analyzing this metric regularly can provide insights into the company's operational efficiency and effectiveness in managing its liquidity.
Peer comparison
Dec 31, 2023