Axalta Coating Systems Ltd (AXTA)
Cash conversion cycle
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 61.02 | 59.52 | 61.08 | 64.08 | 67.66 | 68.70 | 68.28 | 67.20 | 61.37 | 69.19 | 64.54 | 66.73 | 64.12 | 60.83 | 58.72 | 59.82 | 57.55 | 57.10 | 55.07 | 54.81 |
| Days of sales outstanding (DSO) | days | 88.71 | 92.69 | 91.81 | 85.48 | 79.76 | 84.44 | 86.67 | 83.04 | 77.48 | 88.04 | 88.08 | 86.27 | 84.94 | 79.98 | 63.09 | 65.30 | 67.60 | 75.07 | 78.00 | 72.36 |
| Number of days of payables | days | 59.69 | 56.33 | 55.95 | 56.45 | 59.82 | 61.84 | 63.78 | 65.79 | 60.25 | 63.54 | 62.75 | 64.76 | 64.64 | 54.74 | 36.14 | 49.15 | 47.06 | 47.35 | 45.83 | 46.43 |
| Cash conversion cycle | days | 90.04 | 95.87 | 96.94 | 93.11 | 87.60 | 91.29 | 91.18 | 84.44 | 78.61 | 93.70 | 89.87 | 88.24 | 84.43 | 86.07 | 85.67 | 75.97 | 78.09 | 84.82 | 87.24 | 80.75 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 61.02 + 88.71 – 59.69
= 90.04
The cash conversion cycle of Axalta Coating Systems Ltd has shown some fluctuations over the past eight quarters. In Q1 2022, the company had the most efficient cash conversion cycle of 84.90 days, indicating that it took approximately 84.90 days for Axalta to convert its investment in inventory and other resources into cash from sales. However, in subsequent quarters, the cash conversion cycle increased, reaching its peak at 98.44 days in Q2 2023.
Overall, the trend suggests that Axalta's efficiency in managing its working capital and converting it into cash has slightly deteriorated since Q1 2022. The company experienced a less efficient cash conversion cycle in the later quarters of 2022 and throughout 2023, with Q2 2023 being the least efficient period.
It would be advisable for Axalta to closely monitor its working capital management practices and streamline its operations to shorten its cash conversion cycle. A shorter cash conversion cycle indicates better liquidity and operational efficiency, allowing the company to meet its short-term obligations more effectively and potentially enhance its overall financial performance.
Peer comparison
Dec 31, 2023