Eaton Corporation PLC (ETN)
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 | 92.45 | 90.30 | 81.52 | 62.04 | 71.41 |
| Days of sales outstanding (DSO) | days | 70.69 | 72.35 | 59.83 | 58.86 | 59.09 |
| Number of days of payables | days | 83.20 | 80.87 | 76.80 | 58.45 | 53.82 |
| Cash conversion cycle | days | 79.93 | 81.78 | 64.55 | 62.45 | 76.68 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 92.45 + 70.69 – 83.20
= 79.93
The cash conversion cycle of Eaton Corporation plc has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 79.66 days, showing a slight improvement compared to the previous year's 81.12 days. However, this is still higher than the levels seen in 2021 and 2020 which were 66.03 days and 62.94 days, respectively. The highest cycle of 76.24 days was recorded in 2019.
The cash conversion cycle measures the time it takes for a company to convert its investment in inventory and other resources into cash inflows from sales. A longer cash conversion cycle indicates that the company takes more time to collect cash from its sales and may face liquidity challenges.
Overall, Eaton Corporation plc should focus on improving its cash conversion cycle to efficiently manage its working capital and enhance liquidity in the future.
Peer comparison
Dec 31, 2023