Colgate-Palmolive Company (CL)

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	86.82	86.10	92.39	96.87	98.07	100.78	99.35	98.00	87.65	88.56	92.54	93.70	94.61	90.36	87.28	74.16	80.24	79.12	76.73	73.86
Days of sales outstanding (DSO)	days	29.75	30.08	32.36	31.65	30.55	29.32	30.73	32.00	27.17	29.97	30.84	30.61	28.01	29.18	28.19	35.59	33.49	35.23	37.67	36.60
Number of days of payables	days	76.22	66.08	69.96	73.87	73.34	74.92	74.41	80.58	76.62	66.71	69.24	73.01	78.78	70.15	68.10	69.32	70.90	68.56	70.17	70.21
Cash conversion cycle	days	40.35	50.10	54.79	54.65	55.28	55.18	55.66	49.42	38.21	51.82	54.13	51.29	43.85	49.39	47.38	40.44	42.84	45.79	44.23	40.24

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 86.82 + 29.75 – 76.22
= 40.35

The cash conversion cycle of Colgate-Palmolive Co. has shown fluctuating trends over the last eight quarters. In Q4 2023, the company's cash conversion cycle decreased to 40.35 days, representing an improvement from the previous quarter. This indicates that Colgate-Palmolive was able to more efficiently convert its investments in inventory and accounts receivable into cash during the quarter.

Conversely, in Q2 and Q3 2023, the cash conversion cycle increased to 54.79 days and 50.10 days, respectively, reaching a peak in Q2 2023. This suggests that the company took longer to convert its investments in inventory and accounts receivable into cash during those quarters.

Comparing year-over-year, the cash conversion cycle in Q4 2023 showed a slight improvement from the same period in 2022 when it was 55.28 days. Overall, it is essential for Colgate-Palmolive Co. to effectively manage its working capital components to optimize its cash conversion cycle and enhance its overall financial performance.