American Woodmark Corporation (AMWD)
Cash conversion cycle
| Apr 30, 2025 | Apr 30, 2024 | Apr 30, 2023 | Apr 30, 2022 | Apr 30, 2021 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 46.34 | 39.51 | 40.74 | 51.09 | 40.52 |
| Days of sales outstanding (DSO) | days | 23.74 | 26.10 | 21.05 | 30.85 | 30.74 |
| Number of days of payables | days | 36.86 | 16.01 | 13.65 | 24.94 | 23.47 |
| Cash conversion cycle | days | 33.21 | 49.60 | 48.13 | 57.00 | 47.79 |
April 30, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 46.34 + 23.74 – 36.86
= 33.21
The analysis of the cash conversion cycle (CCC) for American Woodmark Corporation over the period from April 2021 through April 2025 reveals notable fluctuations and trends that reflect the company's operational efficiency in managing working capital.
Initially, as of April 30, 2021, the CCC stood at approximately 47.79 days. This indicates the company's average number of days it takes to convert its investments in inventory and receivables into cash, net of the days payable outstanding. The cycle length increased significantly in the following year, reaching approximately 57.00 days as of April 30, 2022. This increase suggests a worsening in the company's operational cycle, possibly due to extended inventory holding periods, slower receivables collection, or deliberate management of payables.
By April 30, 2023, the CCC decreased to approximately 48.13 days, reflecting an improvement and a partial recovery towards the earlier levels recorded in 2021. This reduction indicates enhanced efficiency in converting inventory and receivables into cash, possibly through better inventory management or more aggressive receivables collection strategies.
The trend continued into April 2024, with the CCC slightly rising again to approximately 49.60 days, suggesting a stabilization but also pointing to potential operational adjustments or external factors affecting cash flow timing.
Remarkably, the most significant change is observed in April 2025, where the CCC declines sharply to approximately 33.21 days. This substantial decrease indicates a considerable improvement in operational efficiency, allowing the company to convert its investments into cash more rapidly. Factors contributing to this reduction could include more efficient inventory turnover, faster receivables collection, or changes in payment policies that reduce the cycle duration.
Overall, the company's cash conversion cycle has experienced periods of both elongation and compression over the analyzed timeframe. The recent notable decrease in 2025 signifies a positive shift towards operational efficiency, potentially enhancing liquidity and working capital management. Continuous monitoring and analysis of the underlying factors influencing each component of the CCC—inventory days, receivables days, and payables days—would be essential for a comprehensive understanding of these trends.