Dow Inc (DOW)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	59.02	52.39	50.43	58.11	62.40
Days of sales outstanding (DSO)	days	58.31	54.10	49.74	63.44	69.98
Number of days of payables	days	58.99	54.55	52.08	66.34	64.46
Cash conversion cycle	days	58.34	51.95	48.10	55.21	67.93

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 59.02 + 58.31 – 58.99
= 58.34

The cash conversion cycle of Dow Inc has shown a decreasing trend over the past five years. As of December 31, 2020, the cash conversion cycle was 67.93 days, which decreased to 55.21 days by December 31, 2021. Subsequently, the cash conversion cycle continued to decrease to 48.10 days by December 31, 2022. However, there was a slight increase in the cash conversion cycle to 51.95 days by December 31, 2023, before rising further to 58.34 days by December 31, 2024.

Overall, the decreasing trend in the cash conversion cycle from 2020 to 2022 indicates that Dow Inc was managing its cash flows more efficiently and converting its resources into cash at a quicker rate during that period. The slight increase in the cash conversion cycle in 2023 and 2024 may suggest a lengthening of the time taken to convert goods into cash or manage working capital effectively. Further analysis into the reasons behind these fluctuations could provide insights into the company's operational efficiency and overall liquidity management.