Autoliv Inc (ALV)

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	40.35	44.85	39.60	43.42	36.40
Days of sales outstanding (DSO)	days	79.61	81.03	77.66	90.34	70.02
Number of days of payables	days	78.87	78.36	57.55	66.76	46.22
Cash conversion cycle	days	41.09	47.52	59.72	66.99	60.19

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 40.35 + 79.61 – 78.87
= 41.09

Autoliv Inc.'s cash conversion cycle has shown a decreasing trend over the past five years, indicating an improvement in liquidity management efficiency. In 2023, the company's cash conversion cycle was 37.94 days, down from 45.50 days in 2022 and significantly lower compared to 2020 and 2019. This suggests that Autoliv has been able to convert its investments in raw materials and resources into sales and ultimately cash at a faster pace.

A decreasing cash conversion cycle is typically a positive indicator, as it implies that Autoliv is able to collect cash from customers more quickly, manage its inventory efficiently, and pay its suppliers later in the cycle. This can lead to improved cash flows and working capital management for the company.

Overall, the decreasing trend in Autoliv's cash conversion cycle over the past five years is a positive signal of the company's operational effectiveness and financial health, indicating potential improvements in profitability and liquidity positions.