Arrow Electronics Inc (ARW)
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 | 65.38 | 60.13 | 50.66 | 47.09 | 49.54 |
| Days of sales outstanding (DSO) | days | 134.92 | 121.15 | 117.77 | 117.18 | 107.07 |
| Number of days of payables | days | 126.93 | 118.25 | 115.95 | 113.70 | 100.39 |
| Cash conversion cycle | days | 73.38 | 63.04 | 52.48 | 50.57 | 56.22 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 65.38 + 134.92 – 126.93
= 73.38
The cash conversion cycle of Arrow Electronics Inc. has shown a mixed trend over the past five years. The cycle increased from 56.22 days in 2019 to a peak of 73.38 days in 2023, indicating a lengthening time it takes for the company to convert its investments in inventory and other resources into cash inflows.
The cycle fluctuated over the years, with a notable decrease in 2021 compared to 2020, followed by an increase in 2022 and 2023. This variability suggests that Arrow Electronics Inc. may have experienced changes in its operational efficiency and working capital management during this period.
While a longer cash conversion cycle can indicate inefficiencies in managing inventory, receivables, and payables, it is essential to consider the industry norms and company-specific factors when interpreting these figures. Overall, monitoring and managing the cash conversion cycle effectively is crucial for Arrow Electronics Inc. to optimize its working capital and maintain sustainable cash flows.
Peer comparison
Dec 31, 2023