Carpenter Technology Corporation (CRS)

Cash conversion cycle

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Days of inventory on hand (DOH)	days	102.17	92.09	94.10	86.53	118.92
Days of sales outstanding (DSO)	days	74.51	77.72	78.25	78.72	49.30
Number of days of payables	days	36.66	40.04	45.92	28.94	20.39
Cash conversion cycle	days	140.01	129.78	126.43	136.30	147.83

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 102.17 + 74.51 – 36.66
= 140.01

The cash conversion cycle for Carpenter Technology Corporation has fluctuated over the past five years, with the highest cycle observed in 2020 at 147.83 days and the lowest in 2022 at 126.43 days. In the most recent year, ending on June 30, 2024, the cash conversion cycle was 140.01 days, which indicates a slight increase compared to the previous year's figure of 129.78 days.

A cash conversion cycle of 140.01 days implies that Carpenter Technology Corporation takes around 140 days to convert its investments in raw materials into cash from sales, highlighting the company's efficiency in managing its working capital. The gradual increase in the cash conversion cycle over the past two years suggests a potential liquidity challenge or inefficiency in managing operating cash flows, as the company may be taking longer to collect receivables or convert inventory into sales.

Overall, a thorough analysis of the cash conversion cycle for Carpenter Technology Corporation suggests the need for the company to focus on optimizing its working capital management to improve operational efficiency and enhance cash flow generation.