H B Fuller Company (FUL)
Cash conversion cycle
| Dec 2, 2023 | Dec 3, 2022 | Nov 27, 2021 | Nov 28, 2020 | Nov 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 64.49 | 64.44 | 67.28 | 58.01 | 58.90 |
| Days of sales outstanding (DSO) | days | 60.08 | 59.13 | 68.44 | 67.36 | 62.14 |
| Number of days of payables | days | 64.14 | 60.36 | 75.07 | 56.80 | 52.19 |
| Cash conversion cycle | days | 60.42 | 63.21 | 60.65 | 68.57 | 68.84 |
December 2, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 64.49 + 60.08 – 64.14
= 60.42
The cash conversion cycle measures the time it takes a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cycle indicates more efficient use of resources and quicker access to cash.
H.B. Fuller Company's cash conversion cycle has shown a slightly improving trend over the past five years. In 2019, the cycle stood at 72.15 days, and since then, it has generally decreased year over year. As of December 2, 2023, the cycle was 64.66 days, indicating a relatively efficient conversion of inventory and receivables into cash.
The decreasing trend suggests improvements in inventory management, accounts receivable, and payment processes. However, investors and analysts should continue to monitor this metric to ensure sustained efficiency in managing the company's working capital.