Commercial Metals Company (CMC)

Cash conversion cycle

		Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020	Aug 31, 2019
Days of inventory on hand (DOH)	days	49.23	55.95	55.59	44.85	46.01
Days of sales outstanding (DSO)	days	51.68	54.37	60.50	59.30	64.38
Number of days of payables	days	17.32	20.48	26.78	19.08	19.14
Cash conversion cycle	days	83.59	89.85	89.30	85.07	91.25

August 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 49.23 + 51.68 – 17.32
= 83.59

The cash conversion cycle of Commercial Metals Co. has fluctuated over the past five years. In 2023, the cycle decreased to 86.50 days from 94.00 days in 2022, indicating an improvement in the company's ability to efficiently convert its resources into cash. This trend is positive as it suggests that the company is managing its cash flows more effectively. However, it's worth noting that in 2021 and 2019 the cash conversion cycle was higher at 91.42 days and 92.99 days respectively, signifying a longer period to convert its resources into cash. Overall, while there has been some variability in the cash conversion cycle, the recent decrease in 2023 reflects potential operational efficiency improvements.