Clean Harbors Inc (CLH)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 28.71 | 28.73 | 28.59 | 28.46 | 26.63 | 25.56 | 27.06 | 27.15 | 28.04 | 26.08 | 26.33 | 27.56 | 28.70 | 28.82 | 28.69 | 31.08 | 30.57 | 12.49 | 11.90 | 11.12 |
| Days of sales outstanding (DSO) | days | 64.40 | 69.68 | 70.93 | 69.52 | 66.50 | 69.07 | 67.10 | 66.25 | 68.12 | 75.08 | 80.00 | 79.05 | 76.08 | 74.90 | 73.54 | 73.64 | 71.10 | 68.34 | 62.90 | 69.06 |
| Number of days of payables | days | 36.37 | 38.47 | 35.05 | 36.37 | 36.73 | 34.05 | 31.09 | 35.99 | 38.53 | 36.95 | 39.08 | 41.04 | 41.19 | 36.11 | 33.14 | 30.21 | 27.15 | 30.32 | 25.56 | 34.50 |
| Cash conversion cycle | days | 56.74 | 59.94 | 64.47 | 61.60 | 56.40 | 60.58 | 63.06 | 57.40 | 57.62 | 64.21 | 67.25 | 65.58 | 63.59 | 67.60 | 69.09 | 74.51 | 74.51 | 50.52 | 49.23 | 45.67 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 28.71 + 64.40 – 36.37
= 56.74
The cash conversion cycle of Clean Harbors Inc, which measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has shown fluctuations over the analyzed period.
From March 31, 2020, to December 31, 2024, the cash conversion cycle exhibited a general decreasing trend, implying an improvement in the company's efficiency in managing its working capital. The cycle decreased from 45.67 days in March 2020 to 56.74 days by December 2024.
A lower cash conversion cycle indicates that Clean Harbors Inc is efficient in managing its inventory, accounts receivable, and accounts payable. This improvement suggests that the company has been able to generate cash from its operational activities more quickly over the analyzed period.
Maintaining a lower cash conversion cycle is beneficial as it enables a company to unlock cash tied up in working capital faster, thereby improving its liquidity position and potentially enhancing overall profitability. Clean Harbors Inc's decreasing trend in the cash conversion cycle reflects positively on its working capital management efficiency.