CF Industries Holdings Inc (CF)
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 | 26.71 | 26.57 | 23.87 | 29.59 | 32.49 | 34.06 | 37.21 | 39.04 | 35.88 | 41.37 | 29.99 | 41.73 | 31.52 | 33.75 | 30.48 | 40.66 | 37.50 | 31.01 | 29.89 | 46.17 |
| Days of sales outstanding (DSO) | days | 27.80 | 19.85 | 16.25 | 17.03 | 18.99 | 23.67 | 26.01 | 29.65 | 27.75 | 27.63 | 31.92 | 23.55 | 23.45 | 20.98 | 21.41 | 20.09 | 19.24 | 24.29 | 24.44 | 21.54 |
| Number of days of payables | days | 10.18 | — | — | — | 4.32 | — | — | — | 9.67 | — | — | — | 9.34 | — | — | — | 8.33 | — | — | — |
| Cash conversion cycle | days | 44.32 | 46.42 | 40.12 | 46.62 | 47.16 | 57.73 | 63.22 | 68.70 | 53.95 | 68.99 | 61.91 | 65.28 | 45.64 | 54.73 | 51.89 | 60.75 | 48.41 | 55.30 | 54.33 | 67.71 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 26.71 + 27.80 – 10.18
= 44.32
The cash conversion cycle of CF Industries Holdings Inc has shown fluctuations over the past eight quarters. The company's cash conversion cycle measures the time it takes for the company to convert its investments in raw materials into cash inflows from sales. A shorter cash conversion cycle is generally considered more favorable as it indicates efficient management of working capital.
In Q1 2022, the company had a relatively high cash conversion cycle of 68.70 days, which decreased in the following quarters, reaching a low of 40.12 days in Q2 2023. However, there was an increase in the cash conversion cycle in Q3 2023 and Q4 2023, indicating a potential slowdown in the company's ability to collect cash from sales.
It is important for CF Industries Holdings Inc to monitor and manage its cash conversion cycle effectively to ensure optimal working capital management. A longer cash conversion cycle can tie up cash and increase the company's financing costs, while a shorter cycle can improve liquidity and overall financial health.
Peer comparison
Dec 31, 2023