Darling Ingredients Inc (DAR)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 38.63 | 40.36 | 39.88 | 41.95 | 44.52 | 46.85 | 46.40 | 47.96 | 41.76 | 43.41 | 43.55 | 40.19 | 39.67 | 42.95 | 40.84 | 42.93 | 42.88 | 45.22 | 43.84 | 42.37 |
| Days of sales outstanding (DSO) | days | 1.21 | 1.50 | 1.05 | 0.98 | 0.47 | 40.71 | 40.42 | — | 39.63 | — | — | — | 36.67 | — | — | — | — | — | — | — |
| Number of days of payables | days | 23.35 | 21.67 | 22.20 | 20.95 | 24.97 | 22.48 | 24.02 | — | 29.29 | — | — | — | 26.63 | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 16.48 | 20.20 | 18.72 | 21.97 | 20.02 | 65.08 | 62.80 | 47.96 | 52.10 | 43.41 | 43.55 | 40.19 | 49.71 | 42.95 | 40.84 | 42.93 | 42.88 | 45.22 | 43.84 | 42.37 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 38.63 + 1.21 – 23.35
= 16.48
Darling Ingredients Inc's cash conversion cycle is a metric that measures the time it takes for the company to convert its investments in inventory and other resources into cash received from sales. Analyzing the trend in the cash conversion cycle over the past few quarters reveals fluctuations in the efficiency of Darling's working capital management.
From March 31, 2020, to June 30, 2021, the cash conversion cycle remained relatively stable, fluctuating between 40 to 45 days. This indicates that Darling was efficient in managing its inventory levels, collecting receivables, and paying its suppliers during this period.
However, from September 30, 2021, to June 30, 2023, the cash conversion cycle increased significantly, peaking at 65.08 days. This prolonged cycle suggests that Darling faced challenges in managing its working capital efficiently, which could have been due to issues such as slower collections from customers or increased inventory holding periods.
The cash conversion cycle improved notably in the subsequent quarters, dropping to as low as 16.48 days by December 31, 2024. This reduction indicates that Darling may have implemented strategies to streamline its working capital processes and improve cash flow efficiency.
Overall, monitoring the cash conversion cycle provides valuable insights into Darling's liquidity management and operational efficiency. Fluctuations in this metric can signal potential strengths or weaknesses in the company's working capital practices, highlighting areas that may require attention for optimizing cash flow and financial performance.
Peer comparison
Dec 31, 2024