EMCOR Group Inc (EME)
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 | 3.85 | 3.30 | 2.35 | 2.63 | 1.89 |
| Days of sales outstanding (DSO) | days | 92.93 | 84.61 | 81.25 | 79.75 | 80.79 |
| Number of days of payables | days | 32.56 | 32.73 | 31.90 | 33.13 | 31.06 |
| Cash conversion cycle | days | 64.22 | 55.18 | 51.70 | 49.25 | 51.62 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 3.85 + 92.93 – 32.56
= 64.22
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Emcor Group, Inc.'s cash conversion cycle has shown a fluctuating trend over the past five years:
1. In Dec 31, 2023, the cash conversion cycle increased to 64.22 days, indicating that the company took longer to convert its investments in inventory back into cash compared to the previous year. This could be a signal of potential inefficiencies in managing working capital.
2. In Dec 31, 2022, the cash conversion cycle decreased to 55.18 days, suggesting an improvement in the company's efficiency in managing working capital compared to the previous year. This may have been driven by improved inventory management or faster collection of receivables.
3. In Dec 31, 2021, the cash conversion cycle continued to decrease to 51.70 days, indicating that Emcor Group, Inc. was able to convert its investments into cash more quickly compared to the previous year. This improvement may have been due to streamlined operations or better cash flow management.
4. In Dec 31, 2020, the cash conversion cycle decreased further to 49.25 days, reflecting ongoing efficiency in converting investments into cash. This could have been influenced by tight control over inventory levels and effective management of accounts receivable and payables.
5. In Dec 31, 2019, the cash conversion cycle increased slightly to 51.62 days, suggesting a small deterioration in the efficiency of Emcor Group, Inc.'s working capital management compared to the previous year.
Overall, the fluctuation in Emcor Group, Inc.'s cash conversion cycle over the past five years indicates varying levels of efficiency in managing working capital, which could impact the company's liquidity and profitability. Analysis of the underlying factors driving these changes in the cash conversion cycle would be beneficial for a more comprehensive understanding of Emcor Group, Inc.'s financial performance.
Peer comparison
Dec 31, 2023