AGCO Corporation (AGCO)
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 | 103.24 | 106.43 | 97.27 | 87.92 | 90.88 |
| Days of sales outstanding (DSO) | days | 40.67 | 17.63 | 16.25 | 17.09 | 16.18 |
| Number of days of payables | days | 36.23 | 46.22 | 40.44 | 38.08 | 39.99 |
| Cash conversion cycle | days | 107.69 | 77.83 | 73.08 | 66.93 | 67.06 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 103.24 + 40.67 – 36.23
= 107.69
The cash conversion cycle of AGCO Corp. has shown a steady increase from 92.51 days in 2019 to 117.31 days in 2023. This indicates a lengthening of the time it takes for the company to convert its investments in inventory and accounts receivable into cash generated from sales.
The increase in the cash conversion cycle suggests that AGCO Corp. may be experiencing challenges in managing its working capital efficiently, potentially leading to higher financing costs and reduced liquidity. It is important for the company to closely monitor and improve its inventory management, accounts receivable collection, and accounts payable policies to reduce the cash conversion cycle and enhance overall operational efficiency.
Peer comparison
Dec 31, 2023