Federal Signal Corporation (FSS)

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	87.03	98.02	90.45	80.66	74.30
Days of sales outstanding (DSO)	days	39.45	44.21	40.92	40.99	40.11
Number of days of payables	days	19.13	24.25	25.58	22.50	26.41
Cash conversion cycle	days	107.35	117.99	105.78	99.15	88.00

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 87.03 + 39.45 – 19.13
= 107.35

The cash conversion cycle of Federal Signal Corp. has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle was 107.35 days, which was higher than the previous year's cycle of 117.99 days. This indicates that the company took slightly less time to convert its investments in inventory and accounts receivable back into cash in 2023 compared to 2022.

Looking further back, the cash conversion cycle in 2021 was 105.78 days, showing a slight increase from 99.15 days in 2020. However, there was a notable improvement in the cycle from 2019 to 2020, where it decreased significantly from 88.00 days to 99.15 days.

Overall, the trend in Federal Signal Corp.'s cash conversion cycle has been somewhat volatile, with fluctuations observed from year to year. It is important for the company to closely monitor and manage its cash conversion cycle to ensure efficient utilization of its working capital and optimize its cash flow.