Compass Minerals International Inc (CMP)

Cash conversion cycle

		Sep 30, 2023	Sep 30, 2022	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Days of inventory on hand (DOH)	days	781.40	556.09	790.04	550.59	490.22
Days of sales outstanding (DSO)	days	40.92	50.85	71.37	88.71	79.15
Number of days of payables	days	232.71	209.54	218.47	223.07	204.66
Cash conversion cycle	days	589.62	397.40	642.93	416.24	364.72

September 30, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 781.40 + 40.92 – 232.71
= 589.62

The cash conversion cycle (CCC) of Compass Minerals International Inc has exhibited some fluctuation over the past five years. In September 2023, the company's cash conversion cycle increased to 142.78 days, marking a rise from the previous year's 115.17 days. This indicates that the company took longer to convert its investments in inventory and other resources into cash receipts from sales during the most recent period. Comparing this to December 2020, where the CCC was 167.70 days, the company improved its efficiency in converting resources into cash receipts by shortening the cycle duration by around 24 days. However, the CCC in December 2019 and 2018 was similar to the recent figure, standing at 142.47 days and 123.40 days, respectively. These figures imply that the company was able to convert its resources into cash receipts within a comparable timeframe.

Overall, the trend in the cash conversion cycle indicates fluctuating efficiency in managing the company's resources and converting them into cash receipts from sales. It is essential for the company to focus on optimizing inventory management and accounts receivable collection to potentially decrease the duration of the cash conversion cycle, facilitating improved liquidity and working capital management.