Acuity Brands Inc (AYI)
Cash conversion cycle
| Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 37.98 | 50.09 | 73.28 | 60.73 | 56.72 |
| Days of sales outstanding (DSO) | days | 51.80 | 61.05 | 60.30 | 54.90 | 55.75 |
| Number of days of payables | days | 29.44 | 41.03 | 71.95 | 61.94 | 56.39 |
| Cash conversion cycle | days | 60.33 | 70.11 | 61.63 | 53.68 | 56.09 |
August 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 37.98 + 51.80 – 29.44
= 60.33
The cash conversion cycle (CCC) measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A lower CCC indicates a more efficient management of working capital and cash flows.
Analyzing the trend in Acuity Brands, Inc.'s CCC over the past five years, we observe an increasing trend. The CCC was 64.78 days in 2023, compared to 74.42 days in 2022, 61.63 days in 2021, 53.68 days in 2020, and 56.09 days in 2019.
The increase in the CCC suggests potential inefficiencies in the company's working capital management and cash flow conversion. This trend could be an indication of challenges in managing inventory or collecting receivables, which may tie up the company's capital for longer periods.
It is essential for Acuity Brands, Inc. to closely monitor its working capital cycle and take measures to improve efficiency, such as optimizing inventory management and strengthening collections processes, in order to free up cash flow and enhance its overall financial performance.
Peer comparison
Aug 31, 2023