Granite Construction Incorporated (GVA)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 11.49 | 12.18 | 10.81 | 8.36 | 9.34 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 11.49 | 12.18 | 10.81 | 8.36 | 9.34 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 11.49 + — – —
= 11.49
Granite Construction Incorporated's cash conversion cycle has shown fluctuations over the past five years. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
In December 31, 2020, the cash conversion cycle was 9.34 days. By December 31, 2021, it decreased to 8.36 days, indicating an improvement in the company's efficiency in managing its working capital. However, the cycle increased to 10.81 days by December 31, 2022, possibly suggesting delays in inventory turnover or collection of receivables.
The trend continued with a further increase to 12.18 days by December 31, 2023, which may raise concerns about the company's ability to efficiently convert its resources into cash. However, there was a slight improvement by December 31, 2024, with the cash conversion cycle at 11.49 days.
Overall, Granite Construction Incorporated should focus on optimizing its inventory management and accounts receivable processes to shorten its cash conversion cycle and improve its liquidity position.
Peer comparison
Dec 31, 2024