Dow Inc (DOW)

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	52.39	50.43	58.11	62.40	61.87
Days of sales outstanding (DSO)	days	54.10	49.74	63.44	69.98	64.20
Number of days of payables	days	54.55	52.08	66.34	64.46	59.28
Cash conversion cycle	days	51.95	48.10	55.21	67.93	66.80

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 52.39 + 54.10 – 54.55
= 51.95

The cash conversion cycle of Dow Inc has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 51.81 days, which represents the number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales. This figure was an improvement from 2022 when the cycle was 48.02 days.

Comparing with 2021, the cash conversion cycle was lower in 2022 and 2023, indicating an enhanced efficiency in managing working capital. However, in 2020 and 2019, the cycle was notably higher at 67.93 days and 66.80 days respectively, signaling a longer period for the company to convert its investments into cash.

The downward trend in the cash conversion cycle reflects improved inventory and accounts receivable management, leading to a more efficient cash conversion process in recent years. However, it is important to further investigate the underlying reasons for these fluctuations to better understand the company's working capital management performance.