Compass Minerals International Inc (CMP)

Cash conversion cycle

		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	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	366.90	543.28	781.40	706.53	544.90	612.74	600.25	610.38	188.08	284.55	264.90	204.57	625.50	665.60	566.40	441.82	551.39	858.03	830.52	244.09
Days of sales outstanding (DSO)	days	47.65	53.84	40.92	29.58	49.25	60.59	50.85	34.76	52.78	58.69	28.03	—	55.67	50.46	41.95	56.19	86.80	55.29	46.24	53.09
Number of days of payables	days	88.31	118.90	232.71	201.30	239.24	230.85	226.18	194.98	101.76	92.29	75.71	92.35	172.97	209.78	188.34	196.06	223.39	280.75	265.28	97.70
Cash conversion cycle	days	326.24	478.22	589.62	534.80	354.91	442.48	424.92	450.15	139.10	250.95	217.22	112.22	508.21	506.28	420.02	301.96	414.81	632.57	611.48	199.47

March 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 366.90 + 47.65 – 88.31
= 326.24

The cash conversion cycle of Compass Minerals International Inc has fluctuated significantly over the past couple of years. The company's cash conversion cycle is a metric that reflects how long it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From the data provided, we observe that the cash conversion cycle reached its highest level in the September 30, 2019 period at 632.57 days, indicating an extended time taken by the company to recover cash from its operational cycle. On the other hand, the lowest cash conversion cycle was observed on March 31, 2022, at 139.10 days, showing a relatively efficient cash conversion process during that period.

The trend in the cash conversion cycle shows fluctuating patterns, implying potential challenges in managing inventory, receivables, and payables effectively. The company experienced a significant improvement in cash conversion efficiency from 2019 to 2022, suggesting better working capital management practices during that period. However, the cycle increased notably towards the end of 2023, indicating a potential strain on the company's liquidity and operational efficiency.

Overall, monitoring the cash conversion cycle is essential for assessing the company's ability to manage its working capital effectively and generate cash flows from its operations in a timely manner.