Federal Signal Corporation (FSS)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Days of inventory on hand (DOH)	days	90.18	92.42	90.26	90.82	86.92	97.29	105.58	103.03	98.02	101.98	95.44	94.06	90.45	87.10	83.70	89.34	80.66	84.30	82.78	81.11
Days of sales outstanding (DSO)	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Number of days of payables	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Cash conversion cycle	days	90.18	92.42	90.26	90.82	86.92	97.29	105.58	103.03	98.02	101.98	95.44	94.06	90.45	87.10	83.70	89.34	80.66	84.30	82.78	81.11

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 90.18 + — – —
= 90.18

The cash conversion cycle of Federal Signal Corporation has shown fluctuations over the past few years, ranging from a low of 80.66 days to a high of 105.58 days. This metric represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Analyzing the trend, it is observed that the company's cash conversion cycle has generally increased over the period, indicating potential inefficiencies in managing inventory, accounts receivable, and accounts payable. A longer cash conversion cycle may imply that the company is taking more time to generate cash from its operational activities.

The increase in the cash conversion cycle may be attributed to extended payment terms with suppliers, slower inventory turnover, or delays in collecting receivables from customers. These factors can tie up the company's cash resources and impact its liquidity and working capital management.

It is essential for Federal Signal Corporation to closely monitor and possibly optimize its cash conversion cycle to improve cash flow efficiency, enhance liquidity, and maintain a healthy balance sheet. By streamlining operations, negotiating favorable payment terms, and accelerating the collection of receivables, the company can potentially shorten its cash conversion cycle and strengthen its financial position.