Goodyear Tire & Rubber Co (GT)
Cash conversion cycle
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 66.99 | 71.87 | 79.03 | 82.48 | 83.73 | 91.52 | 84.43 | 82.49 | 79.44 | 81.59 | 85.60 | 65.46 | 59.86 | 60.05 | 68.00 | 76.38 | 73.59 | 76.58 | 79.69 | 75.34 |
| Days of sales outstanding (DSO) | days | 51.23 | 62.38 | 55.49 | 58.18 | 46.81 | 64.88 | 61.33 | 63.69 | 51.03 | 74.24 | 72.24 | 63.52 | 51.63 | 68.26 | 50.95 | 53.22 | 49.07 | 68.73 | 61.29 | 59.80 |
| Number of days of payables | days | 78.37 | 74.51 | 79.05 | 80.65 | 87.98 | 92.08 | 88.35 | 88.90 | 91.68 | 93.89 | 99.65 | 84.27 | 81.89 | 65.02 | 51.07 | 69.21 | 75.06 | 68.47 | 70.90 | 70.14 |
| Cash conversion cycle | days | 39.85 | 59.73 | 55.47 | 60.01 | 42.56 | 64.31 | 57.41 | 57.27 | 38.79 | 61.94 | 58.19 | 44.71 | 29.61 | 63.29 | 67.88 | 60.39 | 47.60 | 76.84 | 70.08 | 65.00 |
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 for Goodyear Tire & Rubber Co. has shown fluctuations over the past eight quarters. In Q4 2023, the company's cash conversion cycle decreased significantly to 35.83 days compared to the previous quarter, indicating an improvement in its efficiency in managing its cash conversion process. This was a positive development following a longer cycle in Q3 2023.
Looking back over the past year, the company experienced a peak in its cash conversion cycle in Q3 2022 at 62.76 days, which then decreased over the subsequent quarters. Despite some variations, the company has generally maintained its cash conversion cycle within a moderate range over the reviewed period.
The cash conversion cycle is a critical metric for assessing a company's efficiency in managing its working capital. A shorter cycle indicates that the company is able to quickly convert its inventory into cash, pay its suppliers promptly, and collect receivables efficiently. Conversely, a longer cycle may suggest inefficiencies in working capital management.
Overall, Goodyear Tire & Rubber Co. should continue to monitor and strive to optimize its cash conversion cycle to ensure efficient utilization of its resources and maintain healthy liquidity levels in the future.