Albemarle Corp (ALB)

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	103.18	83.09	81.33	82.29	93.56	177.74	230.92	238.37	178.48	179.45	157.60	151.46	125.11	119.04	121.67	113.63	128.32	139.00	138.00	136.64
Days of sales outstanding (DSO)	days	86.79	68.43	58.62	57.05	87.65	63.08	66.90	69.25	79.30	76.40	91.55	73.47	80.70	63.58	58.04	67.29	79.69	65.03	64.30	61.85
Number of days of payables	days	—	—	—	—	—	—	—	131.76	131.85	183.63	141.45	126.35	94.07	87.16	88.88	81.61	82.65	78.16	84.81	91.75
Cash conversion cycle	days	189.98	151.52	139.95	139.33	181.22	240.82	297.81	175.86	125.94	72.23	107.70	98.58	111.74	95.46	90.83	99.31	125.36	125.87	117.49	106.75

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 103.18 + 86.79 – —
= 189.98

Albemarle Corp's cash conversion cycle, which measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales, has shown fluctuations over the reporting periods.

From March 31, 2020, to September 30, 2021, the cash conversion cycle ranged between 90.83 days and 125.87 days, indicating moderate efficiency in managing working capital. However, there was a significant improvement in efficiency as the cycle decreased to 72.23 days by September 30, 2022.

Subsequently, there was a substantial increase in the cash conversion cycle to 297.81 days by June 30, 2023, reflecting potential challenges in managing inventory, accounts receivable, and accounts payable effectively. This was followed by a decrease to 139.33 days by March 31, 2024, before rising again to 189.98 days by December 31, 2024.

The fluctuation in the cash conversion cycle suggests that Albemarle Corp may be experiencing challenges in optimizing working capital management, which could impact liquidity and overall financial performance. Therefore, it is crucial for the company to implement strategies to effectively manage inventory, receivables, and payables to improve its cash conversion cycle and ensure financial health and sustainability.