Darling Ingredients Inc (DAR)
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 | 44.52 | 41.70 | 39.67 | 42.88 | 40.47 |
| Days of sales outstanding (DSO) | days | 0.47 | 39.65 | 36.69 | 42.72 | 45.66 |
| Number of days of payables | days | 24.97 | 29.25 | 26.63 | 26.97 | 26.68 |
| Cash conversion cycle | days | 20.02 | 52.10 | 49.73 | 58.63 | 59.45 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 44.52 + 0.47 – 24.97
= 20.02
Darling Ingredients Inc's cash conversion cycle has shown a fluctuating trend over the past five years. The company's cash conversion cycle decreased from 59.45 days in 2019 to 49.73 days in 2021, indicating an improvement in managing its working capital efficiency. However, the cycle increased to 58.63 days in 2020 before further decreasing to 52.10 days in 2022 and 20.02 days in 2023.
A lower cash conversion cycle suggests that Darling Ingredients Inc is able to convert its inventory into cash more quickly, which is a positive sign of efficient operations. The reduction in the cycle from 2022 to 2023 indicates potential improvements in inventory management, accounts receivable collection, and accounts payable turnover.
Overall, Darling Ingredients Inc's declining cash conversion cycle over the past five years highlights the company's efforts in optimizing its working capital management, potentially leading to enhanced liquidity and financial performance.
Peer comparison
Dec 31, 2023