Griffon Corporation (GFF)
Cash conversion cycle
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 66.70 | 68.97 | 79.07 | 80.32 | 50.56 |
| Days of sales outstanding (DSO) | days | 43.55 | 43.92 | 47.82 | 48.74 | 54.46 |
| Number of days of payables | days | 18.71 | 15.87 | 23.02 | 44.18 | 27.25 |
| Cash conversion cycle | days | 91.54 | 97.03 | 103.88 | 84.89 | 77.78 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 66.70 + 43.55 – 18.71
= 91.54
The cash conversion cycle for Griffon Corporation has shown some fluctuations over the past five years. In the most recent fiscal year ending September 30, 2024, the cash conversion cycle was 91.54 days, representing a decrease compared to the previous year. This suggests that the company was able to more efficiently convert its investments in inventory and receivables into cash within the operating cycle.
In the fiscal year ending September 30, 2023, the cash conversion cycle was 97.03 days, indicating a slight increase compared to the prior year. The longer cash conversion cycle may have been influenced by factors such as a slower collection of receivables or higher inventory turnover.
The cash conversion cycle was highest in the fiscal year ending September 30, 2022, at 103.88 days. This indicates that Griffon Corporation took longer to convert its investments in inventory and receivables into cash during that period, possibly due to challenges in managing working capital effectively.
Conversely, in the fiscal year ending September 30, 2020, the cash conversion cycle was 77.78 days, the lowest value in the five-year period. This suggests that the company improved its cash conversion efficiency by reducing the time it took to convert its operating assets into cash during that year.
Overall, monitoring the cash conversion cycle provides insights into Griffon Corporation's management of working capital and operational efficiency. A decreasing trend in the cash conversion cycle is favorable as it indicates the company's ability to generate cash more quickly from its operating activities. However, fluctuations in the cash conversion cycle over time may indicate changes in the company's working capital management practices that investors and analysts should closely monitor.