Peabody Energy Corp (BTU)
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 | 193.59 | 162.57 | 179.22 | 48.52 | 138.90 |
| Days of sales outstanding (DSO) | days | 23.78 | 30.50 | 33.77 | 22.92 | 22.35 |
| Number of days of payables | days | 151.77 | 132.15 | 159.46 | 27.14 | 106.76 |
| Cash conversion cycle | days | 65.60 | 60.92 | 53.53 | 44.30 | 54.49 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 193.59 + 23.78 – 151.77
= 65.60
The cash conversion cycle for Peabody Energy Corp has shown fluctuations over the past five years. This cycle represents the time it takes for a company to convert its resources, such as inventory and accounts receivable, into cash flow from sales.
From the data provided, we observe an increasing trend in the cash conversion cycle from 2019 to 2023. In 2019, the cycle was at 54.49 days, which then decreased to 44.30 days in 2020. However, from 2020 onwards, there was a consistent increase in the cycle, reaching 65.60 days by the end of 2023.
A longer cash conversion cycle indicates that the company is taking more time to convert its investments in inventory and accounts receivable into cash generated from sales. This could be a signal of inefficiencies in inventory management, collections from customers, or longer payment terms with suppliers.
It is important for Peabody Energy Corp to closely monitor and manage its cash conversion cycle to ensure that the company's working capital is optimized. This can help improve liquidity, reduce the need for external financing, and enhance overall financial performance and stability.
Peer comparison
Dec 31, 2023