Albany International Corporation (AIN)
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 | 65.45 | 61.82 | 59.65 | 56.90 | 52.91 |
| Days of sales outstanding (DSO) | days | 99.95 | 79.37 | 87.23 | 89.90 | 82.62 |
| Number of days of payables | days | 33.62 | 30.99 | 34.89 | 25.33 | 36.26 |
| Cash conversion cycle | days | 131.78 | 110.20 | 111.99 | 121.47 | 99.27 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 65.45 + 99.95 – 33.62
= 131.78
Albany International Corp.'s cash conversion cycle has shown some fluctuations over the past five years. The company's cash conversion cycle was 133.07 days as of December 31, 2023, which indicates that on average, it takes the company approximately 133.07 days to convert its investments in inventory and other resources into cash received from sales.
Comparing this to previous years, we see that there was an increase from 109.78 days in 2022 to 133.07 days in 2023. Even though the cash conversion cycle increased in 2023, it remained higher than the 2020 figure of 118.91 days. In 2021, the cycle was slightly lower at 107.83 days, while in 2019, it was notably lower at 94.36 days.
An increasing cash conversion cycle may indicate inefficiencies in the company's operation, such as slower inventory turnover or longer accounts receivable collection periods. Conversely, a decreasing cycle suggests that the company is efficiently managing its working capital.
Overall, it would be beneficial for Albany International Corp. to analyze the reasons behind the increase in the cash conversion cycle in 2023 and identify areas for improvement to optimize working capital management and enhance cash flow efficiency.