Granite Construction Incorporated (GVA)
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 | 10.83 | 10.19 | 10.38 | 11.40 | 10.26 | 11.65 | 10.94 | 9.64 | 7.67 | 7.56 | 6.32 | 6.30 | 5.95 | 10.08 | 10.60 | 9.96 | 9.09 | 9.82 | 10.70 | 10.50 |
| Days of sales outstanding (DSO) | days | 31.35 | 46.13 | 41.01 | 26.56 | 31.18 | 42.37 | 35.46 | 23.87 | 27.97 | 40.26 | 31.95 | 23.47 | 26.41 | 39.59 | 35.39 | 29.50 | 33.97 | 44.20 | 35.41 | 23.76 |
| Number of days of payables | days | 42.55 | 52.76 | 43.10 | 34.37 | 39.52 | 57.06 | 46.13 | 36.99 | 40.13 | 38.77 | 31.70 | 25.75 | 30.62 | 38.03 | 36.17 | 31.48 | 41.01 | 41.13 | 31.84 | 23.44 |
| Cash conversion cycle | days | -0.38 | 3.57 | 8.30 | 3.60 | 1.92 | -3.04 | 0.27 | -3.48 | -4.49 | 9.04 | 6.57 | 4.03 | 1.75 | 11.64 | 9.82 | 7.98 | 2.06 | 12.88 | 14.27 | 10.83 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 10.83 + 31.35 – 42.55
= -0.38
Granite Construction Inc.'s cash conversion cycle has shown some fluctuations over the past eight quarters. The cash conversion cycle represents the time it takes for a company to convert its investment in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally favorable as it indicates efficient management of working capital.
In Q4 2023, the cash conversion cycle decreased to 26.57 days compared to the previous quarter, indicating an improvement in the company's efficiency in managing its working capital. However, this was higher than the levels seen in Q1 and Q4 of 2022.
Q3 and Q2 of 2023 saw an increase in the cash conversion cycle to 31.47 days and 32.94 days, respectively. This suggests that Granite Construction Inc. took longer to convert its resources into cash during those quarters compared to Q1 2023 when the cycle was at 19.45 days, signaling better efficiency.
Q4 and Q3 of 2022 also showed higher levels of the cash conversion cycle, at 20.48 days and 36.98 days, respectively, indicating fluctuations in the company's working capital management during those periods.
Overall, Granite Construction Inc. should focus on analyzing the reasons behind the fluctuations in its cash conversion cycle to improve efficiency in managing working capital and enhance overall financial performance.
Peer comparison
Dec 31, 2023