ESAB Corp (ESAB)
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 | ||
|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 81.52 | 88.08 | 93.63 | 95.09 | 89.08 | |||
| Days of sales outstanding (DSO) | days | 50.67 | 51.57 | 56.02 | 56.10 | 52.68 | |||
| Number of days of payables | days | 63.62 | 62.61 | 69.74 | 75.36 | 67.59 | |||
| Cash conversion cycle | days | 68.57 | 77.03 | 79.91 | 75.82 | 74.17 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 81.52 + 50.67 – 63.62
= 68.57
ESAB Corp's cash conversion cycle has shown some fluctuations over the past five quarters, ranging from 68.57 days to 79.91 days. The trend indicates some variability in the efficiency of the company's working capital management. Generally, a shorter cash conversion cycle is preferable as it signifies that the company is able to quickly convert its investments in inventory and receivables into cash.
In Q2 and Q3 of 2023, ESAB Corp experienced an increase in its cash conversion cycle to 79.91 days and 77.03 days, respectively. This suggests a potential slowdown in the company's ability to efficiently manage its cash flow. However, there was a slight improvement in Q4 2023, with the cash conversion cycle decreasing to 68.57 days.
It is essential for ESAB Corp to closely monitor and manage its cash conversion cycle to ensure optimal working capital levels and operating efficiency. By analyzing the factors contributing to the fluctuations in the cash conversion cycle, the company can identify areas for improvement in managing inventory, accounts receivable, and accounts payable to enhance overall financial performance.
Peer comparison
Dec 31, 2023