Arch Resources Inc (ARCH)
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 | 33.78 | 31.94 | 35.87 | 36.45 | 30.70 | 31.42 | 33.62 | 36.78 | 31.40 | 36.54 | 36.13 | 35.10 | 27.57 | 26.75 | 29.07 | 26.38 | 28.03 | 50.80 | 84.65 | 177.88 |
| Days of sales outstanding (DSO) | days | 31.94 | 32.92 | 27.43 | 29.14 | 23.48 | 21.52 | 50.70 | 44.93 | 55.89 | 47.31 | 38.05 | 33.54 | 27.97 | 28.22 | 23.04 | 25.54 | 26.98 | 31.58 | 27.86 | 29.47 |
| Number of days of payables | days | 28.35 | 27.17 | 25.68 | 23.79 | 29.16 | 27.21 | 26.10 | 26.56 | 26.44 | 23.92 | 25.80 | 27.95 | 22.70 | 18.49 | 19.63 | 19.17 | 28.49 | 49.19 | 67.95 | 169.73 |
| Cash conversion cycle | days | 37.37 | 37.70 | 37.62 | 41.80 | 25.02 | 25.73 | 58.22 | 55.16 | 60.85 | 59.93 | 48.39 | 40.70 | 32.84 | 36.48 | 32.48 | 32.76 | 26.51 | 33.18 | 44.56 | 37.62 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 33.78 + 31.94 – 28.35
= 37.37
The cash conversion cycle of Arch Resources Inc has fluctuated over the past few quarters. The company's average cash conversion cycle for the period appears to be around 40 days.
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory into cash flows from sales. It is calculated by adding the days inventory outstanding to the days sales outstanding and then subtracting the days payables outstanding.
A longer cash conversion cycle indicates that the company is taking longer to convert its inventory into cash, which may signify inefficiencies in its operations or challenges in collecting payments from customers.
Arch Resources Inc experienced a significant increase in its cash conversion cycle in the Jun 30, 2022 quarter, reaching 58.22 days. This spike could be attributed to issues such as inventory management problems, delays in collecting receivables, or extended payment terms with suppliers.
However, the company managed to reduce its cash conversion cycle to around 30-40 days in subsequent quarters, suggesting improvements in managing its working capital. It's noteworthy that the company's cash conversion cycle tends to be higher compared to the industry average, indicating potential areas for further operational enhancement.
Overall, Arch Resources Inc should continue to monitor and manage its cash conversion cycle effectively to optimize its working capital and improve financial performance.
Peer comparison
Dec 31, 2023