Ashland Global Holdings Inc (ASH)
Days of sales outstanding (DSO)
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Receivables turnover | 11.03 | 6.48 | 6.68 | 6.09 | 6.85 | 5.95 | 4.82 | 5.53 | 6.34 | 5.72 | 4.74 | 4.14 | 4.77 | 4.28 | 4.35 | 4.11 | 4.77 | 4.47 | 5.03 | 4.94 | |
| DSO | days | 33.10 | 56.31 | 54.61 | 59.97 | 53.27 | 61.34 | 75.76 | 66.02 | 57.59 | 63.80 | 77.05 | 88.19 | 76.52 | 85.28 | 83.83 | 88.75 | 76.47 | 81.73 | 72.54 | 73.91 |
December 31, 2023 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 11.03
= 33.10
To analyze Ashland Inc's days of sales outstanding (DSO), we can use the formula:
DSO = (Accounts Receivable / Total Credit Sales) * Number of Days
The DSO measures the average number of days it takes for a company to collect payment after a sale has been made. A lower DSO indicates a shorter time to collect payments, which is generally favorable as it implies better cash flow management and efficiency in collecting receivables.
Looking at the trend in Ashland Inc's DSO over the past eight quarters, we observe fluctuations in the DSO values. The DSO decreased from 71.52 days in March 2022 to 53.29 days in December 2022, indicating an improvement in the collection period. However, the DSO increased again in the following quarters, reaching 60.00 days in March 2023, before dropping to 33.10 days by December 2023.
The decreasing trend in DSO from June 2022 to December 2023 suggests that Ashland Inc improved its accounts receivable collection efficiency during this period. This could be due to more effective credit management practices, timely invoicing, or stricter collection policies.
It is important to note that a low DSO should be balanced with the company's industry average and credit terms. A significantly low DSO may indicate very stringent credit policies, potentially affecting sales volume and market competitiveness. Therefore, while a decreasing DSO is generally positive, it is essential to assess the overall impact on the company's operations and customer relationships.
Further analysis should consider other relevant factors such as changes in sales volume, credit terms, and economic conditions to gain a comprehensive understanding of Ashland Inc's DSO performance.
Peer comparison
Dec 31, 2023