Axalta Coating Systems Ltd (AXTA)
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 | 57.26 | 59.74 | 66.34 | 59.88 | 57.65 |
| Days of sales outstanding (DSO) | days | 86.34 | 88.72 | 79.76 | 77.48 | 84.94 |
| Number of days of payables | days | 51.41 | 58.45 | 58.65 | 58.78 | 58.11 |
| Cash conversion cycle | days | 92.19 | 90.01 | 87.45 | 78.58 | 84.48 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 57.26 + 86.34 – 51.41
= 92.19
The cash conversion cycle presents a detailed insight into Axalta Coating Systems Ltd's efficiency in managing its working capital. Over the five-year period from December 31, 2020, to December 31, 2024, the trend shows a fluctuating pattern.
Initially, as of December 31, 2020, the company's cash conversion cycle stood at 84.48 days, indicating the number of days required to convert resources invested in inventory back to cash. Subsequently, the firm managed to improve its efficiency by reducing the cycle to 78.58 days by the end of December 31, 2021.
However, there was a reversal in the positive trend as the cash conversion cycle increased to 87.45 days by December 31, 2022, and further climbed to 90.01 days by December 31, 2023. This suggests a potential delay in the conversion of inventory to cash.
By the end of December 31, 2024, the company's cash conversion cycle extended even further to 92.19 days, signifying a prolonged period for the conversion process. This prolonged cycle could have implications on the company's liquidity and operational efficiency, highlighting the need for a closer examination of inventory management and cash flow operations to streamline the conversion process.
Peer comparison
Dec 31, 2024