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.