Carter’s Inc (CRI)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	171.39	228.38	184.64	173.64	107.82
Days of sales outstanding (DSO)	days	23.04	23.01	24.65	22.94	26.03
Number of days of payables	days	77.27	81.00	116.03	136.81	33.34
Cash conversion cycle	days	117.16	170.39	93.26	59.77	100.52

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 171.39 + 23.04 – 77.27
= 117.16

Carter’s Inc experienced fluctuations in its cash conversion cycle over the past five years. The cash conversion cycle, a metric that measures how efficiently a company manages its working capital, indicates the number of days it takes for a company to convert its resources into cash flow.

In 2023, the cash conversion cycle decreased to 117.16 days from 170.39 days in 2022. This reduction suggests that Carter’s Inc improved its efficiency in managing its working capital and converting inventory into cash during the year. However, it is still higher compared to the levels seen in 2021 and 2020.

In 2022, the cash conversion cycle increased significantly to 170.39 days compared to 93.26 days in 2021. This rise could indicate challenges in managing inventory, accounts receivable, and accounts payable efficiently, leading to a longer cycle to convert resources into cash flow.

In 2021, the cash conversion cycle decreased to 93.26 days from 59.77 days in 2020. This improvement suggests that Carter’s Inc managed its working capital more effectively in 2021, resulting in a quicker conversion of inventory and receivables into cash.

In 2020, the cash conversion cycle increased to 59.77 days from 100.52 days in 2019. This suggests that the company may have faced challenges in managing working capital efficiently, leading to a longer cycle to convert resources into cash flow in 2020.

Overall, monitoring the cash conversion cycle is crucial for assessing a company's liquidity and operational efficiency. Carter’s Inc should continue to focus on optimizing its working capital management to improve its cash conversion cycle and enhance overall financial performance.