Applied Industrial Technologies (AIT)
Cash conversion cycle
| Jun 30, 2025 | Mar 31, 2025 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 58.00 | 58.04 | 59.89 | 57.25 | 56.24 | 58.01 | 60.30 | 59.00 | 58.52 | 62.83 | 64.59 | 63.37 | 60.72 | 60.14 | 58.78 | 57.37 | 57.52 | 59.86 | 60.78 | 59.67 |
| Days of sales outstanding (DSO) | days | 61.56 | 61.22 | 56.74 | 56.30 | 60.10 | 59.14 | 53.92 | 57.06 | 58.59 | 59.67 | 57.36 | 61.80 | 62.88 | 61.89 | 54.16 | 57.33 | 58.24 | 60.74 | 53.07 | 52.01 |
| Number of days of payables | days | 32.15 | 32.72 | 27.85 | 30.50 | 30.75 | 31.22 | 29.41 | 30.20 | 35.23 | 32.91 | 30.92 | 35.84 | 35.03 | 35.01 | 29.93 | 32.02 | 33.03 | 36.30 | 32.83 | 29.66 |
| Cash conversion cycle | days | 87.41 | 86.54 | 88.78 | 83.04 | 85.59 | 85.93 | 84.80 | 85.86 | 81.89 | 89.60 | 91.03 | 89.33 | 88.57 | 87.02 | 83.01 | 82.67 | 82.74 | 84.30 | 81.02 | 82.02 |
June 30, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 58.00 + 61.56 – 32.15
= 87.41
The analysis of Applied Industrial Technologies' cash conversion cycle (CCC) from September 2020 through June 2025 indicates periods of relative stability as well as fluctuations over the observed timeframe. Initially, the CCC remained close to approximately 82 days, with minor variations evident between September 2020 and December 2021, where the cycle generally hovered between approximately 81 and 83 days. During this period, the company's working capital management appears consistent, reflecting a steady balance between inventory holding, receivables collection, and payables deferral.
Starting from the first quarter of 2022, the CCC experienced an upward trend, reaching a peak of approximately 91 days by December 2022. This increase suggests a lengthening of the overall cycle, potentially driven by slower inventory turnover, extended receivables collection periods, or a combination thereof, which could impact liquidity and operational efficiency. March 2023 saw a slight reduction to around 89.6 days, indicating some improvement but still remaining elevated compared to previous years.
In the subsequent periods, notable fluctuations occurred. A significant decrease was observed in June 2023, where the CCC dropped to approximately 81.89 days, representing one of the lowest points since September 2020. This improvement indicates more efficient cash flow management, possibly due to faster receivables collection, optimized inventory turnover, or extended supplier payment terms.
Following this dip, the CCC increased modestly through the latter part of 2023 and into 2024, reaching approximately 88 days by December 2024. The cycle then stabilized somewhat, with minor increases and decreases, remaining around the mid-80s range through March and June 2025, ending at approximately 87.4 days.
Overall, the data reflects a company that has experienced periods of improved working capital efficiency, notably in mid-2023, contrasted with extended cycles during late 2022 and early 2024. The fluctuating nature of the CCC suggests ongoing efforts to optimize operational efficiency, with external factors or internal initiatives likely influencing the timing of cash inflows and outflows. Maintaining a balanced and optimized CCC remains crucial for enhancing liquidity management and supporting operational agility.