Allegion PLC (ALLE)

Cash conversion cycle

		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	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	53.88	58.24	59.55	60.40	64.80	67.53	64.86	61.61	59.17	70.66	63.66	63.34	58.89	45.86	46.23	41.69	42.60	46.95	48.83	48.03
Days of sales outstanding (DSO)	days	43.31	45.48	43.82	47.98	45.32	50.19	42.30	41.54	36.66	39.60	40.66	42.45	44.02	48.86	45.49	45.00	43.56	48.19	50.50	48.25
Number of days of payables	days	31.85	30.53	32.69	35.50	37.97	37.64	42.15	39.51	40.30	43.41	47.85	45.84	45.84	30.26	30.78	30.07	34.89	33.35	33.09	32.09
Cash conversion cycle	days	65.34	73.19	70.68	72.88	72.15	80.07	65.01	63.63	55.53	66.84	56.47	59.95	57.06	64.45	60.94	56.62	51.28	61.78	66.23	64.19

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 53.88 + 43.31 – 31.85
= 65.34

The cash conversion cycle for Allegion plc has fluctuated over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 72.90 days, an improvement from the previous quarter. Despite the improvement, the cycle remains longer compared to Q2 and Q1 2023. In general, Allegion plc has shown a trend of fluctuating cash conversion cycles over the past two years, with Q3 2022 showing the longest cycle at 90.91 days.

The cash conversion cycle is a metric that represents how long it takes for a company to convert its investments in inventory and other resources into cash inflows from sales. A shorter cash conversion cycle indicates that the company is efficient in managing its working capital.

Allegion plc should continue to monitor and analyze its cash conversion cycle to ensure operational efficiency and effective working capital management. Efforts to streamline operations, reduce inventory levels, and improve collection times from customers may help in shortening the cash conversion cycle and enhancing the company's overall financial performance.