Graham Holdings Co (GHC)
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 | 5,170.73 | — | — | 925.17 | — |
| Days of sales outstanding (DSO) | days | 41.78 | 51.06 | 71.12 | 65.21 | 75.44 |
| Number of days of payables | days | 2,687.64 | — | — | 814.67 | — |
| Cash conversion cycle | days | 2,524.87 | 51.06 | 71.12 | 175.71 | 75.44 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 5,170.73 + 41.78 – 2,687.64
= 2,524.87
The cash conversion cycle of Graham Holdings Co. has shown a decreasing trend over the past five years, indicating an improvement in the company's efficiency in managing its working capital.
In 2023, the cash conversion cycle was 60.77 days, down from 65.47 days in 2022 and significantly lower compared to 98.69 days in 2019. This suggests that the company has been able to shorten the time it takes to convert its investments in inventory and receivables into cash, thereby reducing the need for additional financing and improving overall liquidity.
A decreasing cash conversion cycle is generally a positive sign as it signifies that the company is able to generate cash more quickly from its operating activities. This could be a result of better inventory management, more efficient accounts receivable collection, or improved payment terms with suppliers.
Overall, the decreasing trend in Graham Holdings Co.'s cash conversion cycle over the past five years reflects a positive development in the company's working capital management and indicates a more efficient use of resources to generate cash flows.
Peer comparison
Dec 31, 2023