ChampionX Corporation (CHX)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 74.16 | 72.70 | 68.11 | 84.99 | 105.31 |
| Days of sales outstanding (DSO) | days | 46.88 | 51.91 | 57.64 | 69.37 | 107.49 |
| Number of days of payables | days | 68.00 | 62.96 | 58.95 | 74.13 | 73.37 |
| Cash conversion cycle | days | 53.05 | 61.65 | 66.81 | 80.23 | 139.43 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 74.16 + 46.88 – 68.00
= 53.05
The cash conversion cycle of ChampionX Corporation has shown a consistent improvement over the past five years. In 2020, the cash conversion cycle was 139.43 days, indicating that it took the company nearly five months to convert its investments in inventory and accounts receivable back into cash.
However, by the end of 2024, the cash conversion cycle had decreased significantly to 53.05 days, representing a remarkable enhancement in the efficiency of the company's working capital management. This reduction indicates that ChampionX has been more successful in managing its inventory, collecting receivables, and managing payables efficiently over the years.
The decreasing trend in the cash conversion cycle suggests that the company has been able to convert its resources into cash more swiftly, thereby improving its liquidity position and potentially generating more cash flow from operating activities. This improvement in efficiency can have positive implications for the company's overall financial health and performance.
Peer comparison
Dec 31, 2024