GE Aerospace (GE)

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	586.21	365.42	468.88	75.93	72.00
Days of sales outstanding (DSO)	days	83.07	93.17	76.84	80.34	109.42
Number of days of payables	days	378.73	306.23	324.58	—	66.61
Cash conversion cycle	days	290.56	152.36	221.14	156.26	114.81

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 586.21 + 83.07 – 378.73
= 290.56

The cash conversion cycle for General Electric Co. has fluctuated over the past five years. In 2023, the cash conversion cycle decreased significantly to 125.45 days from 200.09 days in 2022. This indicates that the company was able to manage its cash flow more efficiently in 2023. However, compared to 2019 when the cycle was 81.71 days, GE's cash conversion cycle has increased over the past five years.

A lower cash conversion cycle signifies that the company is able to convert its investments in inventory and receivables into cash more quickly, which is generally a positive indicator. Conversely, a longer cycle could suggest inefficiencies in managing working capital.

It is important for General Electric Co. to analyze the factors contributing to the changes in its cash conversion cycle over the years to identify areas for improvement in managing its cash flow more effectively. Consistent monitoring and optimization of the cash conversion cycle can help the company enhance its liquidity position and overall financial performance.