Clean Harbors Inc (CLH)
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 | 28.68 | 26.60 | 28.01 | 28.67 | 30.53 |
| Days of sales outstanding (DSO) | days | 64.40 | 66.50 | 68.12 | 76.08 | 71.10 |
| Number of days of payables | days | 36.33 | 36.69 | 38.50 | 41.15 | 27.12 |
| Cash conversion cycle | days | 56.75 | 56.41 | 57.63 | 63.60 | 74.51 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 28.68 + 64.40 – 36.33
= 56.75
Clean Harbors Inc's cash conversion cycle has shown a decreasing trend over the years, indicating an improvement in the company's efficiency in managing its cash flows. The cash conversion cycle decreased from 74.51 days on December 31, 2020, to 56.75 days on December 31, 2024. This reduction suggests that the company is effectively managing its working capital and converting its resources into cash more quickly.
A lower cash conversion cycle is generally viewed favorably as it signifies that Clean Harbors Inc is able to collect payments from its customers faster, manage its inventory efficiently, and extend payment terms to suppliers. This improvement in the cash conversion cycle reflects positively on the company's liquidity and operational efficiency.
Overall, the decreasing trend in Clean Harbors Inc's cash conversion cycle indicates that the company is becoming more adept at managing its cash flows, which could potentially lead to improved financial stability and profitability in the future.