The AES Corporation (AES)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 21.72 | 23.83 | 24.51 | 23.36 | 25.57 | 28.59 | 27.15 | 30.35 | 38.24 | 37.23 | 34.10 | 28.60 | 26.15 | 26.75 | 21.99 | 22.91 | 24.15 | 24.08 | 25.13 | 22.12 |
| Days of sales outstanding (DSO) | days | 51.46 | 55.50 | 44.26 | 46.93 | 43.25 | 49.34 | 48.19 | 52.18 | 55.14 | 52.91 | 52.09 | 48.94 | 52.48 | 46.75 | 48.04 | 49.19 | 54.33 | 53.77 | 53.70 | 53.44 |
| Number of days of payables | days | 60.59 | 72.48 | 69.29 | 75.45 | 78.97 | 58.80 | 55.53 | 52.86 | 62.71 | 62.98 | 65.96 | 53.54 | 49.92 | 47.06 | 46.85 | 42.73 | 60.56 | 56.04 | 60.19 | 51.29 |
| Cash conversion cycle | days | 12.59 | 6.86 | -0.53 | -5.16 | -10.15 | 19.14 | 19.81 | 29.66 | 30.67 | 27.17 | 20.23 | 24.00 | 28.71 | 26.44 | 23.18 | 29.37 | 17.92 | 21.81 | 18.64 | 24.26 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 21.72 + 51.46 – 60.59
= 12.59
The cash conversion cycle of The AES Corporation has fluctuated over the years based on the data provided. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
From March 31, 2020, to June 30, 2022, the company had a positive cash conversion cycle, indicating that it took a certain number of days to convert its investments into cash. The cycle ranged between 17.92 days to 29.66 days during this period.
However, from December 31, 2023, to December 31, 2024, the cash conversion cycle turned negative, implying that The AES Corporation was able to convert its investments into cash more quickly than before. The cycle ranged from -10.15 days to 12.59 days during this period.
A negative cash conversion cycle can be an indicator of efficient working capital management, implying that the company is able to collect cash from its sales before paying its suppliers for inventory. This can improve liquidity and overall financial health. However, it's essential to assess the reasons behind the negative cycle and ensure it is not due to unsustainable practices or financial manipulation.