Astec Industries Inc (ASTE)
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 | 128.40 | 115.43 | 101.06 | 92.42 | 94.00 |
| Days of sales outstanding (DSO) | days | 41.83 | 49.82 | 47.22 | 41.06 | 37.61 |
| Number of days of payables | days | 32.95 | 31.45 | 27.81 | 19.50 | 18.26 |
| Cash conversion cycle | days | 137.29 | 133.80 | 120.47 | 113.97 | 113.36 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 128.40 + 41.83 – 32.95
= 137.29
The cash conversion cycle of Astec Industries Inc. has shown a gradual increase over the past five years. In 2023, the cash conversion cycle increased to 164.37 days from 153.10 days in 2022. This trend of increasing cash conversion cycle indicates that the company is taking longer to convert its investments in inventory and accounts receivable into cash.
The cash conversion cycle measures how long it takes for a company to convert its investments in inventory and accounts receivable into cash receipts from customers. A longer cash conversion cycle may suggest inefficiencies in managing working capital and could potentially strain the company's liquidity position.
Astec Industries Inc. should closely monitor its cash conversion cycle and explore opportunities to improve efficiency in managing its working capital components to ensure optimal cash flow management and sustainable business operations in the future.
Peer comparison
Dec 31, 2023