Curtiss-Wright Corporation (CW)
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 | 77.85 | 81.63 | 69.90 | 100.99 | 97.57 |
| Days of sales outstanding (DSO) | days | 95.62 | 105.18 | 95.85 | 89.86 | 92.75 |
| Number of days of payables | days | 37.22 | 45.04 | 35.94 | 47.38 | 50.99 |
| Cash conversion cycle | days | 136.25 | 141.78 | 129.80 | 143.46 | 139.33 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 77.85 + 95.62 – 37.22
= 136.25
The cash conversion cycle of Curtiss-Wright Corp. has shown some fluctuation over the past five years, with varying durations recorded. The cycle measures the time it takes for a company to convert its investment in inventory into cash received from the sale of the inventory. A longer cycle indicates that the company is taking more time to sell its inventory and collect cash, which can tie up working capital and impact liquidity.
In 2023, the cash conversion cycle improved to 148.63 days from 152.77 days in 2022. This suggests that the company was able to more efficiently manage its inventory and accounts receivable, leading to a shorter cycle and potentially freeing up cash for other uses.
Comparing the 2023 figure to earlier years, it's evident that the cycle was longer than in 2021 (140.66 days) and 2019 (139.33 days) but shorter than in 2020 (143.46 days). This indicates that although there was an improvement from the previous year, there is still room for further optimization.
Analyzing the components of the cash conversion cycle, a company can focus on reducing the days inventory outstanding (DIO), days sales outstanding (DSO), and days payable outstanding (DPO) to shorten the overall cycle. This may involve more efficient inventory management, quicker collection of receivables, and strategic payment terms with suppliers.
Overall, it appears that Curtiss-Wright Corp. has made some progress in managing its cash conversion cycle in 2023. However, continued efforts to streamline operations and optimize working capital turnover could further enhance the company's financial efficiency and liquidity position.
Peer comparison
Dec 31, 2023