Smith AO Corporation (AOS)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 62.02 | 64.01 | 62.55 | 61.14 | 58.06 | 61.57 | 60.95 | 59.55 | 60.65 | 60.51 | 56.28 | 57.34 | 55.55 | 46.52 | 45.03 | 44.86 | 44.35 | 45.54 | 46.20 | 46.07 |
| Days of sales outstanding (DSO) | days | 51.77 | 52.35 | 60.45 | 55.33 | 56.64 | 56.62 | 57.73 | 57.41 | 56.65 | 54.11 | 58.96 | 59.32 | 65.51 | 67.46 | 68.81 | 64.55 | 73.91 | 74.54 | 67.93 | 66.58 |
| Number of days of payables | days | 68.62 | 64.13 | 65.99 | 65.29 | 70.09 | 66.64 | 65.33 | 65.07 | 73.49 | 68.57 | 71.29 | 77.29 | 92.55 | 84.49 | 83.46 | 78.50 | 87.97 | 77.80 | 65.78 | 65.20 |
| Cash conversion cycle | days | 45.17 | 52.24 | 57.02 | 51.19 | 44.62 | 51.55 | 53.35 | 51.89 | 43.81 | 46.05 | 43.95 | 39.37 | 28.51 | 29.50 | 30.38 | 30.91 | 30.29 | 42.28 | 48.35 | 47.45 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 62.02 + 51.77 – 68.62
= 45.17
The cash conversion cycle of Smith AO Corporation has shown fluctuations over the periods analyzed. The company's cash conversion cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
Looking at the data provided, we observe that the cash conversion cycle ranged from a low of 28.51 days on December 31, 2021, to a high of 57.02 days on June 30, 2024. The lower the cash conversion cycle, the more efficient the company is at managing its working capital.
From an efficiency standpoint, it is favorable for a company to have a shorter cash conversion cycle as it indicates that the company is able to quickly sell inventory, collect payments, and manage its operating cycle effectively. On the other hand, a longer cash conversion cycle may signify inefficiencies in inventory management, credit policies, or collections processes.
It is important for Smith AO Corporation to monitor and manage its cash conversion cycle effectively to ensure optimal working capital management. Analyzing trends and identifying areas for improvement can help the company enhance its liquidity position and overall financial performance.
Peer comparison
Dec 31, 2024