AAR Corp (AIR)
Cash conversion cycle
| May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 121.94 | 149.00 | 201.90 | 314.51 | 900.50 | 962.99 | 1,035.15 | 1,029.73 | 977.30 | 975.28 | 988.64 | 996.45 | 1,027.17 | 1,457.42 | 1,382.04 | 1,297.03 | 1,216.21 | 314.99 | 171.49 | 123.04 |
| Days of sales outstanding (DSO) | days | 46.12 | 42.97 | 41.90 | 49.34 | 44.54 | 45.55 | 44.70 | 44.61 | 43.01 | 43.00 | 40.43 | 38.78 | 37.40 | 42.41 | 35.24 | 31.76 | 30.23 | 37.08 | 34.78 | 33.97 |
| Number of days of payables | days | 39.59 | 51.10 | 65.55 | 113.78 | 248.61 | 266.20 | 272.27 | 347.83 | 277.66 | 256.58 | 231.12 | 273.28 | 241.69 | 471.68 | 468.48 | 390.17 | 373.98 | 149.54 | 68.37 | 47.29 |
| Cash conversion cycle | days | 128.47 | 140.87 | 178.25 | 250.07 | 696.42 | 742.34 | 807.59 | 726.50 | 742.66 | 761.70 | 797.95 | 761.95 | 822.88 | 1,028.14 | 948.80 | 938.62 | 872.47 | 202.53 | 137.90 | 109.72 |
May 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 121.94 + 46.12 – 39.59
= 128.47
The cash conversion cycle of AAR Corp has fluctuated over time, indicating changes in the efficiency of the company's working capital management. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
In the most recent period, the cash conversion cycle was 128.47 days, showing an improvement compared to the previous period's 140.87 days. This suggests that AAR Corp has been able to manage its working capital more effectively, leading to a quicker turnaround in converting its resources into cash.
However, looking further back, the cash conversion cycle has experienced significant fluctuations, with periods of extended cycles, such as the exceptionally high 1,028.14 days observed in Feb 28, 2021. This indicates potential challenges in managing inventory, receivables, and payables efficiently during those periods.
Overall, AAR Corp should focus on maintaining a consistently low cash conversion cycle to optimize its working capital management, improve liquidity, and enhance its overall financial performance. Further analysis of the underlying reasons for the fluctuations in the cycle can help the company implement targeted strategies to improve efficiency and profitability.
Peer comparison
May 31, 2024