Alaska Air Group Inc (ALK)

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	5.36	4.71	4.21	4.17	4.10
Days of sales outstanding (DSO)	days	13.41	11.20	32.27	49.13	13.43
Number of days of payables	days	9.56	10.01	13.57	7.90	8.32
Cash conversion cycle	days	9.20	5.90	22.91	45.40	9.21

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 5.36 + 13.41 – 9.56
= 9.20

The cash conversion cycle of Alaska Air Group Inc. has shown variations over the past five years. In 2023, the cash conversion cycle improved to 13.41 days compared to the previous year's 11.20 days. This indicates that the company is managing its working capital more efficiently.

In 2021, there was a significant increase in the cash conversion cycle to 32.27 days, suggesting that the company took longer to convert its investments in inventory and receivables into cash. However, the company made improvements in 2022 by reducing the cycle to 11.20 days.

The most significant increase in the cash conversion cycle was seen in 2020, where it reached 49.13 days. This could indicate challenges in managing inventory levels or collecting receivables efficiently. The company managed to bring the cycle back to a more optimal level in 2019 at 13.43 days.

Overall, fluctuations in the cash conversion cycle of Alaska Air Group Inc. over the years suggest varying efficiency in managing its working capital components such as inventory, accounts receivable, and accounts payable. It is essential for the company to continue monitoring and optimizing its cash conversion cycle to ensure effective utilization of its resources.