Carpenter Technology Corporation (CRS)

Cash conversion cycle

		Jun 30, 2024	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	Sep 30, 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
Days of inventory on hand (DOH)	days	67.90	73.62	72.69	64.27	59.06	76.61	93.48	95.57	94.09	286.31	280.09	163.73	107.15	126.65	102.56	110.65	118.92	147.30	151.33	142.53
Days of sales outstanding (DSO)	days	74.51	50.10	48.80	49.62	53.45	80.56	75.93	73.82	78.23	74.24	73.79	77.21	79.17	70.38	49.85	47.78	49.25	57.65	57.73	58.96
Number of days of payables	days	24.37	25.45	28.56	28.69	25.67	31.06	39.41	44.68	45.91	116.37	89.21	70.63	35.84	31.95	19.67	19.93	20.39	35.53	39.48	44.23
Cash conversion cycle	days	118.04	98.27	92.94	85.20	86.83	126.12	130.00	124.71	126.40	244.17	264.67	170.30	150.48	165.08	132.74	138.49	147.78	169.42	169.58	157.27

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 67.90 + 74.51 – 24.37
= 118.04

The cash conversion cycle of Carpenter Technology Corporation has fluctuated over the past several quarters, indicating varying efficiency in its cash management processes.

Initially, the cash conversion cycle was relatively stable, hovering between 130 to 160 days in the latter half of 2020 and early 2021. However, there was a significant spike in the cycle to 264.67 days by March 31, 2022 - suggesting potential issues with inventory management and collection of receivables. This was likely a cause for concern as such a prolonged cycle can tie up cash and negatively impact liquidity.

Subsequently, there was a notable improvement in the cash conversion cycle, as it decreased to 92.94 days by December 31, 2023. This improvement may have been driven by more effective inventory turnover and quicker collection of receivables, resulting in a more efficient management of working capital.

However, in the most recent quarter, the cash conversion cycle increased again to 118.04 days, which may indicate a reversal of the previously observed improvements. It is essential for Carpenter Technology Corporation to consistently monitor and manage its cash conversion cycle to ensure optimal cash flow and working capital efficiency.