Carter’s Inc (CRI)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	154.56	171.39	228.38	184.64	173.64
Days of sales outstanding (DSO)	days	25.01	23.04	23.01	24.65	22.94
Number of days of payables	days	76.37	77.27	81.00	116.03	136.81
Cash conversion cycle	days	103.20	117.16	170.39	93.26	59.77

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 154.56 + 25.01 – 76.37
= 103.20

The cash conversion cycle for Carter’s Inc has shown fluctuations over the years. In December 2020, the company had a cash conversion cycle of 59.77 days, indicating that it took approximately 59.77 days to convert its investments in inventory into cash receipts from sales.

However, by December 2021, the cash conversion cycle had increased to 93.26 days, suggesting that the company took longer to convert its investments into cash during that period. This increase may be attributed to factors such as slower inventory turnover or longer accounts receivable collection periods.

The trend continued in December 2022, with the cash conversion cycle reaching 170.39 days, which is a significant jump from the previous year. This prolonged cycle may indicate challenges in managing cash flow, inventory levels, and receivables effectively.

In December 2023, there was a decrease in the cash conversion cycle to 117.16 days, signaling some improvement in the company's ability to convert investments into cash more efficiently compared to the previous year.

By December 2024, the cash conversion cycle decreased further to 103.20 days, suggesting that Carter’s Inc managed its working capital more effectively, resulting in a shorter time taken to convert investments into cash receipts.

Overall, analyzing the cash conversion cycle over the years provides insights into Carter’s Inc's efficiency in managing its working capital, inventory, and receivables. It is essential for the company to continuously monitor and improve its cash conversion cycle to enhance financial performance and liquidity.