BorgWarner Inc (BWA)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 33.60 | 38.03 | 36.30 | 34.50 | 32.76 | 32.01 | 43.98 | 44.36 | 30.62 | 44.38 | 46.02 | 46.04 | 42.18 | 42.39 | 43.04 | 43.70 | 49.84 | 39.28 | 41.78 | 39.37 |
| Days of sales outstanding (DSO) | days | 40.33 | 47.38 | 52.71 | 63.69 | 71.71 | 74.20 | 83.54 | 80.93 | 57.07 | 80.13 | 77.79 | 78.35 | 71.10 | 69.67 | 78.41 | 96.68 | 104.75 | 81.97 | 63.98 | 64.09 |
| Number of days of payables | days | — | — | — | — | — | — | — | — | 67.54 | — | — | — | 62.58 | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 73.93 | 85.42 | 89.01 | 98.19 | 104.47 | 106.21 | 127.51 | 125.29 | 20.15 | 124.51 | 123.81 | 124.39 | 50.69 | 112.07 | 121.45 | 140.38 | 154.60 | 121.25 | 105.76 | 103.46 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 33.60 + 40.33 – —
= 73.93
The cash conversion cycle of BorgWarner Inc has fluctuated over the reported periods, indicating variations in the company's efficiency in managing its cash flows related to its operations. Generally, a shorter cash conversion cycle is preferred as it signifies that the company is able to convert its investments in inventory back to cash quickly.
From the data provided, we see that BorgWarner Inc's cash conversion cycle was relatively stable around 100 to 120 days from March 2020 to March 2023. However, there was a notable improvement in efficiency in managing cash flows towards the end of 2022 and throughout 2024, as the cash conversion cycle reduced significantly to around 70 to 90 days.
The significant reduction in the cash conversion cycle from December 2022 to December 2024 suggests that BorgWarner Inc was able to manage its working capital more effectively, potentially by reducing the time it takes to sell inventory, collect receivables, and pay its payables. This improvement can indicate better liquidity and financial health for the company during these periods.
Overall, the trend in BorgWarner Inc's cash conversion cycle shows a mix of periods of efficiency and inefficiency in managing its working capital. Monitoring this ratio over time can provide valuable insights into the company's operational and financial performance.
Peer comparison
Dec 31, 2024