Eastman Chemical Company (EMN)

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	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	85.93	84.85	91.86	86.93	81.88	84.01	78.68	73.23	68.83	79.32	77.56	82.67	77.46	74.61	77.58	87.80	86.18	85.44	86.39	83.46
Days of sales outstanding (DSO)	days	35.19	34.26	34.31	37.32	34.22	38.07	40.47	40.19	44.04	49.65	50.37	51.91	57.90	46.29	37.95	41.76	46.88	46.03	46.52	47.70
Number of days of payables	days	73.52	—	—	—	69.47	71.42	72.30	72.40	69.24	71.63	72.75	71.41	59.04	50.91	41.93	55.04	60.67	59.53	64.42	64.07
Cash conversion cycle	days	47.60	119.11	126.17	124.26	46.63	50.66	46.85	41.02	43.63	57.34	55.17	63.17	76.32	69.99	73.60	74.52	72.39	71.94	68.49	67.10

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 85.93 + 35.19 – 73.52
= 47.60

The cash conversion cycle for Eastman Chemical Co has exhibited fluctuations over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 71.93 days, which was significantly higher compared to the previous quarter but lower than the same period last year. This indicates that Eastman Chemical Co took longer to convert its invested resources into cash in Q4 2023.

The trend in the cash conversion cycle reflects the efficiency of the company's working capital management. A shorter cash conversion cycle typically indicates that the company is able to quickly convert its inventory and receivables into cash, thereby improving its liquidity position.

In contrast, a longer cash conversion cycle may suggest inefficiencies in managing inventory, collecting receivables, or paying suppliers. It can also indicate that the company is experiencing difficulties in generating cash flow, potentially leading to liquidity challenges.

It is important for Eastman Chemical Co to closely monitor and manage its cash conversion cycle to ensure optimal working capital management and liquidity. Analyzing the factors contributing to fluctuations in the cash conversion cycle can provide insights into areas that may need improvement to enhance the company's overall financial performance.