Axalta Coating Systems Ltd (AXTA)
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 | 59.75 | 66.34 | 59.88 | 57.65 | 52.09 |
| Days of sales outstanding (DSO) | days | 88.71 | 79.76 | 77.48 | 84.94 | 67.60 |
| Number of days of payables | days | 58.44 | 58.65 | 58.78 | 58.11 | 42.59 |
| Cash conversion cycle | days | 90.01 | 87.45 | 78.58 | 84.48 | 77.10 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 59.75 + 88.71 – 58.44
= 90.01
The cash conversion cycle of Axalta Coating Systems Ltd has shown some fluctuations over the past five years. As of December 31, 2023, the company's cash conversion cycle stood at 90.36 days, which indicates that it takes, on average, approximately 90.36 days for Axalta to convert its investments in inventory and accounts receivable into cash from sales.
Comparing this figure to the previous years, we observe a slight increase from 89.89 days in 2022 and a notable increase from 78.99 days in 2021. The increase in the cash conversion cycle from 2021 to 2023 may suggest that the company is taking longer to sell its inventory and collect payments from customers, resulting in a longer cycle to convert investments into cash.
However, when comparing 2023 to 2020 and 2019, the cash conversion cycle has decreased from 84.27 days and 81.09 days, respectively. This reduction may imply that Axalta has improved its efficiency in managing its working capital, resulting in a shorter time period to convert investments into cash.
Overall, the trend in Axalta's cash conversion cycle indicates fluctuations over the past five years, with a recent uptick in the cycle duration. It may be important for the company to focus on enhancing inventory management and accounts receivable collection processes to potentially shorten the cash conversion cycle and improve liquidity in the future.
Peer comparison
Dec 31, 2023