Greif Bros Corporation (GEF)
Cash conversion cycle
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 25.98 | 25.40 | 35.47 | 25.16 | 30.70 |
| Days of sales outstanding (DSO) | days | 45.67 | 43.17 | 57.42 | 51.20 | 52.89 |
| Number of days of payables | days | 38.20 | 35.35 | 50.06 | 38.62 | 37.29 |
| Cash conversion cycle | days | 33.45 | 33.22 | 42.83 | 37.74 | 46.29 |
October 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 25.98 + 45.67 – 38.20
= 33.45
The cash conversion cycle (CCC) measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. For Greif Inc, the trend in the CCC over the past five years shows fluctuations in the efficiency of its cash management.
In 2023, the CCC stood at 31.85 days, relatively consistent with the previous year's level of 31.67 days. This indicates that Greif Inc has maintained a stable cash conversion process, efficiently managing its inventory and accounts receivable to generate cash.
In 2022, the CCC decreased to 31.67 days, reflecting an improvement from the 2021 figure of 41.64 days. This was a positive development as it suggests that Greif Inc was able to reduce the time it takes to convert its resources into cash, potentially enhancing its liquidity position.
In 2021, the CCC increased significantly to 41.64 days, compared to 35.54 days in 2020. This rise indicates a slowdown in the company's cash conversion process, possibly due to inefficiencies in inventory management or delays in collecting receivables.
In 2020, the CCC decreased from 45.03 days in 2019 to 35.54 days, reflecting an improvement in cash conversion efficiency. This suggests that Greif Inc may have implemented better inventory management or accounts receivable practices during this period.
In 2019, the CCC was relatively high at 45.03 days, indicating that Greif Inc took a longer time to convert its investments into cash flows from sales. This may have impacted the company's working capital and liquidity position during that period.
Overall, the trend in Greif Inc's cash conversion cycle shows fluctuations, with some years demonstrating improved efficiency in cash conversion while others experienced challenges. Analyzing the components of the CCC, such as inventory turnover and accounts receivable turnover, can provide further insights into the factors driving these changes and help identify opportunities for enhancement in the company's cash management processes.