Colgate-Palmolive Company (CL)

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	91.34	86.82	98.07	87.65	94.61
Days of sales outstanding (DSO)	days	27.62	29.75	30.55	27.17	28.01
Number of days of payables	days	82.98	76.22	73.34	76.62	78.78
Cash conversion cycle	days	35.99	40.35	55.28	38.21	43.85

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 91.34 + 27.62 – 82.98
= 35.99

The cash conversion cycle of Colgate-Palmolive Company has been fluctuating over the past five years. In 2020, the cash conversion cycle was 43.85 days, which decreased to 38.21 days in 2021, indicating an improvement in efficiency. However, there was an increase in the cash conversion cycle in 2022 to 55.28 days, suggesting a lengthening period for the company to convert its investments in inventory and other resources back into cash.

By the end of 2023, the cash conversion cycle decreased to 40.35 days, showing a positive trend towards quicker conversion of investments into cash. In the most recent data available for 2024, the cash conversion cycle further improved to 35.99 days, indicating that Colgate-Palmolive has been managing its cash flow more effectively and efficiently.

Overall, the fluctuation in the cash conversion cycle of Colgate-Palmolive over the years suggests that the company has been actively managing its working capital and operations to optimize cash flow and liquidity. The downward trend in recent years indicates improved efficiency in converting investments into cash, which can positively impact the company's financial performance and stability.