BorgWarner Inc (BWA)
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 | 41.21 | 34.98 | 46.73 | 56.86 | 36.51 |
| Days of sales outstanding (DSO) | days | 79.93 | 71.38 | 71.29 | 104.81 | 68.96 |
| Number of days of payables | days | — | 77.14 | 69.33 | — | 59.95 |
| Cash conversion cycle | days | 121.13 | 29.22 | 48.69 | 161.68 | 45.52 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 41.21 + 79.93 – —
= 121.13
The cash conversion cycle for BorgWarner Inc has shown some fluctuations over the past five years. In general, the trend indicates that the company has been able to improve its efficiency in converting its investments in raw materials and other inputs into cash receipts from sales.
The decrease in the cash conversion cycle from 57.68 days in 2020 to 41.23 days in 2023 reflects an improvement in managing its working capital, indicating that BorgWarner Inc has been able to reduce the time it takes to sell inventory, collect receivables, and pay suppliers.
Despite a slight increase in 2019, the overall decreasing trend in the cash conversion cycle is a positive sign for the company's liquidity and operational efficiency. This improvement suggests that BorgWarner Inc has been successful in streamlining its operations and optimizing its cash flow management.
Overall, the decreasing trend in the cash conversion cycle over the years indicates that BorgWarner Inc has been effectively managing its working capital and operational processes to enhance efficiency and profitability.
Peer comparison
Dec 31, 2023