Dow Inc (DOW)

Cash conversion cycle

		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	Dec 31, 2019
Days of inventory on hand (DOH)	days	52.39	52.40	51.44	50.76	50.43	53.35	58.76	57.85	58.11	60.17	64.45	63.02	62.40	62.17	62.21	64.58	61.87
Days of sales outstanding (DSO)	days	54.10	58.75	56.76	53.31	49.74	52.41	58.98	62.30	63.44	66.93	71.96	74.20	69.98	67.86	64.25	66.54	64.20
Number of days of payables	days	54.55	53.30	48.88	48.79	52.08	53.60	60.85	63.67	66.34	63.44	67.70	67.24	64.46	59.46	54.12	57.02	59.28
Cash conversion cycle	days	51.95	57.85	59.31	55.28	48.10	52.16	56.90	56.48	55.21	63.67	68.72	69.99	67.93	70.57	72.34	74.09	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 (CCC) of Dow Inc has shown fluctuation over the past eight quarters, indicating changes in the efficiency of its working capital management. The CCC measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In the most recent quarter, the CCC stands at 51.81 days, a decrease from the previous quarter. This suggests a potential improvement in the company's ability to efficiently manage its inventory, collect receivables, and pay off its payables. However, the trend over the past few quarters has shown slight variability, with the CCC reaching its lowest point at 48.02 days in December 2022 and peaking at 59.46 days in June 2023.

The fluctuation in the CCC indicates that Dow Inc may have experienced changes in its inventory management, sales collection, and payment processes. It is essential for the company to closely monitor and manage its CCC to ensure optimal utilization of its working capital and to mitigate potential liquidity challenges. Additionally, further analysis of the components contributing to the CCC, such as inventory turnover, accounts receivable turnover, and accounts payable turnover, can provide deeper insights into the company's operational efficiency and cash flow management.