Goodyear Tire & Rubber Co (GT)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 86.52 | 91.02 | 94.85 | 86.97 | 81.52 | 85.12 | 92.90 | 96.73 | 98.41 | 108.11 | 100.12 | 98.58 | 95.81 | 100.40 | 106.12 | 81.72 | 76.02 | 75.19 | 84.90 | 94.50 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 86.52 | 91.02 | 94.85 | 86.97 | 81.52 | 85.12 | 92.90 | 96.73 | 98.41 | 108.11 | 100.12 | 98.58 | 95.81 | 100.40 | 106.12 | 81.72 | 76.02 | 75.19 | 84.90 | 94.50 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 86.52 + — – —
= 86.52
The cash conversion cycle (CCC) for Goodyear Tire & Rubber Co is a key metric that reflects the efficiency of the company's cash management and working capital cycle. The CCC measures the time it takes for a company to convert its investments in raw materials into cash collected from customers. A shorter CCC is generally preferred as it indicates that the company is able to generate cash more quickly from its operations.
Analyzing the data provided, we observe fluctuations in Goodyear's CCC over the periods covered. In the most recent period, December 31, 2024, the company's CCC was recorded as 86.52 days, which represents the time it takes for Goodyear to complete a full cash conversion cycle. This figure can be broken down into three main components:
1. Days Inventory Outstanding (DIO): This metric reflects the average number of days the company holds inventory before selling it. A higher DIO implies slower inventory turnover. For Goodyear, we would need additional data to calculate the DIO.
2. Days Sales Outstanding (DSO): DSO measures the average number of days it takes for the company to collect payment from its customers after a sale is made. A higher DSO indicates slower collection of accounts receivable. Again, we require further information to compute the DSO for Goodyear.
3. Days Payable Outstanding (DPO): DPO represents the average number of days the company takes to pay its suppliers. Extending the DPO can improve cash flow as it delays cash outflows. However, this also reflects how effectively a company manages its supplier relationships.
Overall, Goodyear's CCC has shown variability over the periods provided, with some fluctuations observed. It is essential for the company to balance its inventory management, accounts receivable collection, and accounts payable practices to optimize its cash conversion cycle and enhance overall liquidity and efficiency. Assessing trends in the CCC can help stakeholders evaluate the company's working capital management and financial health.
Please note that a deeper analysis incorporating additional financial data would provide a more comprehensive understanding of Goodyear's cash conversion cycle and working capital dynamics.