FMC Corporation (FMC)

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	176.20	139.19	193.32	154.39	146.94
Days of sales outstanding (DSO)	days	236.36	188.04	187.31	183.44	176.66
Number of days of payables	days	61.55	105.53	144.17	133.41	130.05
Cash conversion cycle	days	351.02	221.70	236.45	204.42	193.55

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 176.20 + 236.36 – 61.55
= 351.02

The cash conversion cycle of FMC Corp. has shown a fluctuating trend over the past five years.

In 2019, the company's cash conversion cycle was 193.55 days, indicating the time it takes for the company to convert its investments in inventory and other resources into cash flow from sales. This figure increased to 204.21 days in 2020, reflecting a potential delay in the company's ability to efficiently manage its working capital.

However, there was an improvement in 2021 with the cash conversion cycle decreasing to 221.31 days, suggesting a more effective management of inventory, accounts receivable, and accounts payable. This trend continued in 2022 with a further reduction to 222.57 days.

In 2023, there was a significant increase in the cash conversion cycle to 374.13 days. This indicates a potential problem with the company's cash flow and working capital management, as it took longer for the company to convert its investments into cash during this period.

Overall, it is essential for FMC Corp. to closely monitor and analyze its cash conversion cycle to ensure efficient management of working capital and sustained cash flow generation.