Gates Industrial Corporation plc (GTES)
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 | 106.83 | 103.97 | 116.69 | 105.50 | 89.18 |
| Days of sales outstanding (DSO) | days | 81.65 | 84.37 | 76.40 | 94.56 | 84.75 |
| Number of days of payables | days | 75.55 | 74.41 | 86.60 | 86.65 | 70.33 |
| Cash conversion cycle | days | 112.92 | 113.94 | 106.48 | 113.41 | 103.60 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 106.83 + 81.65 – 75.55
= 112.92
The cash conversion cycle of Gates Industrial Corporation plc has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle stood at 112.92 days, compared to 113.94 days in 2022, indicating a slightly improved efficiency in managing the conversion of inventory into cash during the most recent period. However, this improvement follows a trend of fluctuation in the cycle length over the previous years, with durations ranging from 103.60 days in 2019 to 113.41 days in 2020.
The variability in the cash conversion cycle suggests that Gates Industrial Corporation plc may have experienced challenges in managing its working capital effectively. A longer cash conversion cycle typically indicates longer periods of time between the company's cash outflows for inventory and cash inflows from sales, which can tie up capital and impact liquidity.
In order to enhance efficiency and optimize working capital management, the company may consider strategies to streamline inventory turnover, shorten accounts receivable collection times, and extend accounts payable payment periods. This would help reduce the cash conversion cycle duration, improve liquidity, and potentially free up cash for other strategic investments or operational needs.
Peer comparison
Dec 31, 2023