Freeport-McMoran Copper & Gold Inc (FCX)
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 | 135.81 | 119.13 | 111.03 | 114.50 | 106.48 |
| Days of sales outstanding (DSO) | days | 26.67 | 28.84 | 27.94 | 36.43 | 29.63 |
| Number of days of payables | days | 57.35 | 65.34 | 52.94 | 46.13 | 46.00 |
| Cash conversion cycle | days | 105.14 | 82.64 | 86.04 | 104.79 | 90.11 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 135.81 + 26.67 – 57.35
= 105.14
The cash conversion cycle of Freeport-McMoRan Inc has shown some fluctuations over the past five years.
From 2019 to 2020, the cash conversion cycle increased from 106.26 days to 124.36 days, indicating a lengthening of the time it takes for the company to convert its investments in inventory and accounts receivable into cash.
In 2021, there was a slight improvement in the cash conversion cycle, which decreased to 102.62 days, suggesting better management of inventory and receivables leading to a quicker conversion to cash compared to the previous year.
However, in 2022, there was a significant improvement in the cash conversion cycle, dropping to 98.14 days, indicating further efficiency in managing working capital and converting it into cash.
The trend reversed in 2023 as the cash conversion cycle increased to 122.84 days, potentially indicating challenges in managing working capital efficiently and converting it into cash promptly.
Overall, the company should focus on maintaining and improving its cash conversion cycle to ensure effective management of working capital and optimize cash flow.
Peer comparison
Dec 31, 2023