Allegion PLC (ALLE)
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 | 53.25 | 64.08 | 58.71 | 43.92 | 42.32 |
| Days of sales outstanding (DSO) | days | 43.31 | 45.32 | 36.66 | 44.02 | 43.56 |
| Number of days of payables | days | 31.48 | 37.55 | 39.99 | 34.19 | 34.65 |
| Cash conversion cycle | days | 65.09 | 71.85 | 55.38 | 53.75 | 51.23 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 53.25 + 43.31 – 31.48
= 65.09
The cash conversion cycle of Allegion plc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 72.90 days, which was a decrease compared to the previous year. This indicates that Allegion is taking slightly less time to convert its investments in inventory into cash receipts from customers.
The trend over the past five years shows that the cash conversion cycle has generally been increasing, with a peak in 2022 at 81.26 days. This may suggest potential inefficiencies in managing inventory, accounts receivables, and accounts payables during that period. However, there was a notable improvement in 2023 compared to 2022.
Overall, Allegion plc's cash conversion cycle has been relatively stable, with fluctuations indicating changes in the company's ability to efficiently manage its working capital. Further analysis of the components of the cash conversion cycle, such as inventory turnover, accounts receivable turnover, and accounts payable turnover, may provide additional insights into the company's liquidity and operational efficiency.