Chart Industries Inc (GTLS)
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 | 68.52 | 84.95 | 91.69 | 79.65 | 59.95 |
| Days of sales outstanding (DSO) | days | 91.37 | 117.42 | 66.33 | 52.74 | 58.04 |
| Number of days of payables | days | 96.43 | 50.11 | 50.17 | 44.92 | 34.49 |
| Cash conversion cycle | days | 63.47 | 152.27 | 107.86 | 87.46 | 83.51 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 68.52 + 91.37 – 96.43
= 63.47
The cash conversion cycle of Chart Industries Inc has shown variability over the past five years. In 2023, the cash conversion cycle improved to 98.02 days, indicating that the company is managing its cash flow more efficiently compared to the previous years. This could be attributed to better inventory management, faster collection of accounts receivable, or extended payment terms with suppliers.
In 2022, the cash conversion cycle increased to 137.75 days, suggesting that the company took longer to convert its investments in inventory and accounts receivable into cash during that period. This could be a result of increased inventory levels or slower collection of receivables, which could impact the company's liquidity and working capital management.
Similarly, in 2021, the cash conversion cycle was 144.85 days, indicating a further deterioration in the company's ability to convert its resources into cash efficiently. A longer cash conversion cycle could signal inefficiencies in inventory management, credit policies, or payment terms with suppliers, leading to potential liquidity challenges.
In 2020, the cash conversion cycle was 133.67 days, showing a slight improvement compared to the previous year. However, the cycle remained relatively high, implying that the company still faced challenges in optimizing its working capital and cash flow processes.
In 2019, the cash conversion cycle was 116.92 days, indicating a more favorable position compared to the subsequent years. A shorter cash conversion cycle suggests that the company was more efficient in managing its working capital and converting investments into cash during that period.
Overall, the trend in the cash conversion cycle of Chart Industries Inc shows fluctuations over the five-year period, with improvements in some years and deteriorations in others. It is essential for the company to continuously monitor and optimize its cash conversion cycle to ensure efficient working capital management and sustainable cash flow operations.