Cleveland-Cliffs Inc (CLF)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 75.89 | 88.70 | 114.95 | 253.53 | 81.81 |
| Days of sales outstanding (DSO) | days | 30.53 | 31.12 | 38.51 | 81.33 | 27.99 |
| Number of days of payables | days | 35.72 | 37.79 | 45.93 | 104.31 | 49.81 |
| Cash conversion cycle | days | 70.71 | 82.02 | 107.53 | 230.55 | 59.99 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 75.89 + 30.53 – 35.72
= 70.71
The cash conversion cycle of Cleveland-Cliffs Inc has fluctuated over the past five years. In 2023, the company's cash conversion cycle decreased to 72.36 days from 83.61 days in 2022. This improvement indicates that Cleveland-Cliffs is managing its working capital more efficiently, as it takes fewer days to convert its invested resources into cash.
Comparing 2023 to 2021, there has been a significant reduction in the cash conversion cycle from 109.92 days to 72.36 days. This decrease suggests that Cleveland-Cliffs has been able to streamline its operations, resulting in a quicker conversion of inventory and receivables into cash, which is a positive sign for the company's liquidity and cash flow management.
However, a notable observation is the sharp increase in the cash conversion cycle from 2019 to 2020, where it jumped to 242.51 days. This spike may indicate potential issues with managing inventory, collecting receivables, or a delay in paying suppliers.
Overall, the downward trend in the cash conversion cycle from 2020 to 2023 reflects an improvement in Cleveland-Cliffs' efficiency in converting its resources into cash, which is a key indicator of the company's operational effectiveness and financial health.
Peer comparison
Dec 31, 2023