Cabot Corporation (CBT)
Cash conversion cycle
| 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 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 66.41 | 66.99 | 67.08 | 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 |
| Days of sales outstanding (DSO) | days | 66.99 | 67.50 | 69.45 | 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 |
| Number of days of payables | days | 59.55 | — | — | — | 51.70 | — | — | — | 56.62 | — | — | — | 67.13 | — | — | — | 54.56 | — | — | — |
| Cash conversion cycle | days | 73.84 | 134.50 | 136.54 | 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 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 66.41 + 66.99 – 59.55
= 73.84
The cash conversion cycle of Cabot Corporation has exhibited some fluctuations over the past few quarters. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
In analyzing the data provided, we observe that the cash conversion cycle has varied between a low of 65.79 days to a high of 151.86 days over the last few years. A shorter cash conversion cycle is generally favorable as it indicates that the company is able to more quickly convert its investments into cash, which can improve liquidity and overall financial health.
However, in the most recent quarter, ending on September 30, 2024, the cash conversion cycle was 73.84 days. This represents a decrease from the preceding quarter but is still higher than some previous quarters. A longer cash conversion cycle can indicate inefficiencies in managing inventory, collecting receivables, or paying off payables, which can tie up cash and potentially lead to liquidity issues.
Therefore, Cabot Corporation may benefit from analyzing the components of its cash conversion cycle, such as inventory turnover, accounts receivable collection period, and accounts payable payment period, to identify areas for improvement and work towards optimizing its working capital management.
Peer comparison
Sep 30, 2024