Armstrong World Industries Inc (AWI)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	23.74	25.06	27.97	24.25	26.86
Days of sales outstanding (DSO)	days	34.00	32.47	33.35	36.30	31.31
Number of days of payables	days	35.50	28.51	32.40	33.90	32.30
Cash conversion cycle	days	22.24	29.02	28.92	26.65	25.87

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 23.74 + 34.00 – 35.50
= 22.24

The cash conversion cycle (CCC) of Armstrong World Industries Inc has shown fluctuations over the past five years. In December 2020, the CCC stood at 25.87 days, indicating the company took approximately 25.87 days to convert its investments in inventory and other resources into cash flows from sales.

However, by December 2021, the CCC increased to 26.65 days, suggesting a slight delay in the conversion of investments into cash. This trend continued in December 2022 and 2023, with the CCC reaching 28.92 days and 29.02 days, respectively. These higher values indicate a lengthening of the cash conversion cycle, which may have implications for the company's liquidity and operational efficiency.

In a positive turn, by December 2024, the CCC decreased to 22.24 days, showing an improvement in the efficiency of the company's working capital management. A shorter CCC implies that Armstrong World Industries Inc was able to more swiftly convert its investments into cash during that period.

Overall, monitoring and managing the cash conversion cycle is crucial for Armstrong World Industries Inc to optimize its working capital, enhance liquidity, and improve operational efficiency in the long run.