GE Aerospace (GE)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	695.32	293.82	365.42	468.88	75.93
Days of sales outstanding (DSO)	days	87.96	89.87	93.17	76.84	80.34
Number of days of payables	days	563.28	266.58	306.23	324.58	—
Cash conversion cycle	days	220.00	117.11	152.36	221.14	156.26

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 695.32 + 87.96 – 563.28
= 220.00

The cash conversion cycle, which measures the time it takes for a company to convert its investments in inventory into cash flows from sales, exhibits fluctuations in GE Aerospace's operations over the years.

In December 2020, the cash conversion cycle stood at 156.26 days, indicating it took the company around 156 days to convert its investment in inventory into cash flows from sales.

By December 2021, the cash conversion cycle extended significantly to 221.14 days, suggesting a prolonged period for the company to convert its inventory investments into cash.

In December 2022, there was a notable improvement as the cash conversion cycle decreased to 152.36 days, showcasing a more efficient operation in converting inventory to cash.

Further progress was observed in December 2023, with the cycle reducing to 117.11 days, indicating a continued focus on improving efficiency in converting inventory into cash flows.

However, by December 2024, the cash conversion cycle surged back up to 220.00 days, potentially signaling challenges in managing inventory levels and turning them into cash.

Overall, GE Aerospace's cash conversion cycle has shown fluctuations over the years, underscoring the importance of effective inventory management and cash flow optimization in sustaining the company's financial health.