AGCO Corporation (AGCO)
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 | 92.54 | 109.34 | 106.25 | 116.36 | 103.24 | 111.45 | 116.51 | 116.79 | 106.43 | 116.44 | 122.04 | 118.68 | 97.27 | 106.47 | 105.89 | 100.84 | 87.91 | 130.28 | 143.97 | 137.60 |
| Days of sales outstanding (DSO) | days | 41.83 | 42.02 | 39.84 | 40.20 | 40.67 | 32.62 | 29.40 | 24.03 | 17.63 | 18.03 | 18.23 | 17.67 | 16.25 | 18.03 | 19.16 | 19.94 | 17.09 | 28.07 | 27.26 | 23.29 |
| Number of days of payables | days | 27.55 | 30.52 | 32.66 | 38.09 | 36.23 | 39.14 | 42.32 | 45.74 | 46.22 | 41.02 | 43.45 | 46.47 | 40.44 | 42.48 | 45.31 | 46.89 | 38.07 | 51.93 | 52.58 | 51.70 |
| Cash conversion cycle | days | 106.83 | 120.84 | 113.42 | 118.47 | 107.69 | 104.94 | 103.59 | 95.08 | 77.83 | 93.44 | 96.82 | 89.88 | 73.08 | 82.03 | 79.74 | 73.90 | 66.92 | 106.43 | 118.65 | 109.19 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 92.54 + 41.83 – 27.55
= 106.83
The cash conversion cycle is a vital indicator of how efficiently a company manages its working capital. It represents the time it takes for a company to convert its investments in inventory into cash from sales.
Analyzing the data provided for AGCO Corporation's cash conversion cycle over multiple quarters, we observe fluctuations in the cycle duration. The cycle ranged from a high of 120.84 days on September 30, 2024, to a low of 66.92 days on December 31, 2020.
The increasing trend in the cash conversion cycle from December 31, 2020, peaking at 120.84 days on September 30, 2024, could indicate potential issues in managing working capital efficiency. A longer cash conversion cycle may signify inventory management challenges, delayed customer payments, or inefficiencies in the collection process.
Conversely, the decrease in the cycle duration from September 30, 2024, to December 31, 2024, suggests improvements in working capital management, possibly driven by better inventory control, faster collection of receivables, or more efficient payment terms with suppliers.
It is essential for AGCO Corporation to monitor its cash conversion cycle continuously and implement strategies to optimize working capital efficiency. By shortening the cycle, the company can free up cash for investment, reduce reliance on external financing, and enhance overall financial performance.
Peer comparison
Dec 31, 2024