Applied Industrial Technologies (AIT)

Cash conversion cycle

		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	Dec 31, 2019	Sep 30, 2019
Days of inventory on hand (DOH)	days	44.57	45.87	47.59	46.63	46.25	49.64	50.84	49.59	47.33	46.60	45.41	43.48	43.35	44.81	43.39	43.35	44.71	46.45	52.03	52.14
Days of sales outstanding (DSO)	days	59.09	58.01	54.08	57.31	58.93	60.03	57.72	62.21	63.31	62.37	54.61	57.86	58.83	61.41	53.63	52.56	51.14	56.80	53.71	56.41
Number of days of payables	days	24.37	24.69	23.21	23.87	27.84	26.00	24.34	28.05	27.30	27.13	23.12	24.27	24.89	27.18	23.43	21.55	21.40	23.63	23.83	25.71
Cash conversion cycle	days	79.29	79.20	78.46	80.08	77.34	83.67	84.22	83.75	83.34	81.84	76.90	77.07	77.29	79.05	73.58	74.35	74.45	79.62	81.91	82.84

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 44.57 + 59.09 – 24.37
= 79.29

The cash conversion cycle of Applied Industrial Technologies has shown some fluctuation over the past few quarters. The trend indicates that the company takes an average of around 80 days to convert its investments in inventory and other resources into cash receipts from customers.

A shorter cash conversion cycle is generally more favorable as it reflects a quicker turnaround time for the company in terms of selling inventory and collecting cash from customers. The company should strive to lower its cash conversion cycle to improve its liquidity and working capital management.

It is important for Applied Industrial Technologies to focus on optimizing its inventory management, accounts receivable collection processes, and accounts payable terms to minimize the cash conversion cycle. By efficiently managing these components, the company can potentially reduce the cycle and improve its cash flows and overall financial performance over time.