Commercial Metals Company (CMC)

Cash conversion cycle

		Aug 31, 2024	Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020
Days of inventory on hand (DOH)	days	48.65	49.23	55.95	55.59	44.85
Days of sales outstanding (DSO)	days	53.70	51.68	54.37	60.50	59.30
Number of days of payables	days	17.55	17.32	20.48	26.78	19.08
Cash conversion cycle	days	84.79	83.59	89.85	89.30	85.07

August 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 48.65 + 53.70 – 17.55
= 84.79

The cash conversion cycle for Commercial Metals Company has shown some fluctuations over the past five years. In the most recent fiscal year ending August 31, 2024, the cash conversion cycle increased to 84.79 days from 83.59 days in the previous year. This indicates that the company took slightly longer to convert its investment in inventory into cash during the most recent period.

Comparing the current cycle to the figures from two years prior, there seems to have been an improvement in efficiency, as the cycle was lower in 2024 compared to 2022 when it was 89.85 days. However, when looking at the trend over the last five years, the cycle has generally been in the range of 83 to 89 days, with some variability in between.

Overall, Commercial Metals Company should continue to focus on managing its inventory, accounts receivable, and accounts payable efficiently to shorten its cash conversion cycle and improve its working capital management. This can help enhance the company's liquidity and financial performance in the long term.