Cabot Corporation (CBT)
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 | 73.89 | 69.06 | 66.61 | 66.84 | 74.48 | 70.54 | 74.12 | 75.53 | 70.50 | 73.14 | 73.88 | 73.95 | 70.68 | 61.98 | 63.81 | 69.19 | 67.69 | 64.14 | 71.75 | 77.27 |
| Days of sales outstanding (DSO) | days | 67.53 | 64.53 | 61.58 | 65.73 | 65.85 | 70.62 | 77.74 | 74.39 | 66.35 | 69.06 | 73.02 | 76.30 | 71.11 | 58.37 | 47.49 | 54.24 | 54.59 | 57.97 | 66.37 | 60.13 |
| Number of days of payables | days | — | 51.70 | — | — | — | 56.62 | — | — | — | 67.13 | — | — | — | 54.56 | — | — | — | 53.68 | — | — |
| Cash conversion cycle | days | 141.42 | 81.88 | 128.19 | 132.57 | 140.33 | 84.53 | 151.86 | 149.92 | 136.84 | 75.07 | 146.90 | 150.25 | 141.80 | 65.79 | 111.30 | 123.43 | 122.27 | 68.43 | 138.13 | 137.40 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 73.89 + 67.53 – —
= 141.42
The cash conversion cycle of Cabot Corp., a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has fluctuated over the past eight quarters. In Q1 2024, the company had a cash conversion cycle of 141.42 days, which indicates that it takes Cabot this amount of time, on average, to convert its investments in inventory and other resources into cash from sales. This represents an increase from the previous quarter, Q4 2023, where the cycle was 81.88 days, suggesting a significant elongation.
Looking at historical trends, we see that Q3 2022 had the longest cash conversion cycle of 151.86 days, while the shortest cycle of 81.88 days was recorded in Q4 2023. This variability in the cash conversion cycle may be reflective of changes in Cabot Corp.'s inventory management efficiency, accounts receivable collection, and accounts payable practices over time.
Overall, the company should aim to reduce its cash conversion cycle duration to improve liquidity and efficiency in its operations. This can be achieved through streamlining inventory management, optimizing accounts receivable collection processes, and negotiating favorable payment terms with suppliers to shorten the cycle and enhance cash flow management.
Peer comparison
Dec 31, 2023