Adient PLC (ADNT)

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	21.25	21.37	22.46	24.29	26.33	26.13	27.43	29.23	27.17	27.71	23.03	22.69	21.79	20.70	21.63	19.29	18.27	18.41	17.88	18.62
Days of sales outstanding (DSO)	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Number of days of payables	days	61.79	64.20	67.77	70.76	65.61	67.93	67.96	72.29	65.88	60.48	56.73	71.38	68.27	65.85	43.01	54.84	59.44	62.88	62.81	64.78
Cash conversion cycle	days	-40.54	-42.82	-45.31	-46.47	-39.28	-41.81	-40.53	-43.06	-38.71	-32.77	-33.70	-48.69	-46.48	-45.15	-21.37	-35.55	-41.16	-44.47	-44.93	-46.16

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 21.25 + — – 61.79
= -40.54

The cash conversion cycle of Adient plc has shown fluctuations over the past eight quarters. The company was able to convert its inventory and accounts receivable into cash quicker than its accounts payable obligations in Q1 2024, resulting in a negative cash conversion cycle of -1.06 days. This indicates efficient working capital management.

In the previous quarter, Q4 2023, the cash conversion cycle was 1.61 days, suggesting a similar efficient trend. However, in Q3 2023, the cycle increased to 4.11 days, indicating a slight slowdown in the conversion of inventory and receivables into cash relative to the payment of accounts payable.

Q2 2023 and Q1 2023 also saw relatively longer cash conversion cycles of 3.80 days and 5.39 days, respectively, which may imply a temporary increase in working capital requirements or delays in payment collections.

Looking further back, Q4 2022 and Q3 2022 had cash conversion cycles of 6.06 days and 8.01 days, respectively, indicating a longer period between the outflow and inflow of cash. However, there was an improvement in Q2 2022 with a cycle of 5.86 days, suggesting more efficient working capital management compared to the previous quarters.

Overall, the cash conversion cycle of Adient plc has varied over the quarters, with some periods showing more efficient working capital management than others. Monitoring this metric can provide insights into the company's liquidity, operational efficiency, and management of working capital.