Goodyear Tire & Rubber Co (GT)
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 | 66.99 | 83.73 | 79.44 | 60.86 | 73.58 |
| Days of sales outstanding (DSO) | days | 51.23 | 46.81 | 51.03 | 51.49 | 49.06 |
| Number of days of payables | days | 78.37 | 87.98 | 91.68 | 83.24 | 75.05 |
| Cash conversion cycle | days | 39.85 | 42.56 | 38.79 | 29.10 | 47.58 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 66.99 + 51.23 – 78.37
= 39.85
The cash conversion cycle of Goodyear Tire & Rubber Co. has varied over the past five years. In 2023, the company's cash conversion cycle decreased to 35.83 days from 40.79 days in 2022, indicating an improvement in the company's efficiency in managing its working capital. This trend is further supported by comparing 2023 to 2021, when the cash conversion cycle was slightly higher at 35.08 days.
In 2020, Goodyear exhibited a significantly shorter cash conversion cycle, which stood at 22.13 days, reflecting strong performance in converting its inventory into cash. On the contrary, the company faced challenges in managing its working capital in 2019, as the cash conversion cycle increased to 46.25 days.
Overall, Goodyear's cash conversion cycle has shown fluctuations over the years, with improvements seen in recent periods. The company's ability to efficiently manage its cash, inventory, and receivables is crucial in maintaining a healthy financial position. Continuous monitoring and optimization of the cash conversion cycle can contribute to enhanced liquidity and profitability for the organization.