Clean Harbors Inc (CLH)
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 | 26.60 | 28.01 | 28.67 | 30.53 | 26.95 |
| Days of sales outstanding (DSO) | days | 66.50 | 68.12 | 76.08 | 71.10 | 69.02 |
| Number of days of payables | days | 36.69 | 38.50 | 41.15 | 27.12 | 37.45 |
| Cash conversion cycle | days | 56.41 | 57.63 | 63.60 | 74.51 | 58.52 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 26.60 + 66.50 – 36.69
= 56.41
The cash conversion cycle of Clean Harbors, Inc. over the past five years has demonstrated fluctuations. The cycle decreased from 62.21 days in 2019 to 61.51 days in 2023, showing an improvement in the company's ability to convert its investments in inventory and accounts receivable into cash. This reduction indicates more efficient management of working capital.
In 2020, there was a significant increase in the cash conversion cycle to 81.66 days, signaling a potential deterioration in the company's liquidity management. However, Clean Harbors managed to bring down the cycle in the following years, with 2021 at 69.87 days and 2022 at 63.18 days, showing a positive trend towards faster conversion of inventory and receivables into cash.
Overall, the company has shown a mix of improving and deteriorating trends in its cash conversion cycle over the past five years. It is crucial for Clean Harbors to consistently monitor and optimize its working capital management to ensure efficient cash flow operations and sustainable financial performance.
Peer comparison
Dec 31, 2023