WW Grainger Inc (GWW)
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 | 59.01 | 57.89 | 59.46 | 61.22 | 62.63 | 59.07 | 58.61 | 58.86 | 59.01 | 57.99 | 56.92 | 57.11 | 57.50 | 59.06 | 56.39 | 54.32 | 58.76 | 55.00 | 55.33 | 54.81 |
| Days of sales outstanding (DSO) | days | 48.82 | 55.09 | 55.43 | 53.74 | 51.43 | 53.60 | 54.23 | 54.11 | 49.49 | 50.71 | 48.95 | 48.72 | 45.89 | 46.60 | 46.09 | 50.65 | 45.54 | 48.13 | 48.89 | 48.45 |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 107.83 | 112.98 | 114.89 | 114.96 | 114.06 | 112.67 | 112.84 | 112.97 | 108.50 | 108.70 | 105.87 | 105.83 | 103.39 | 105.67 | 102.48 | 104.97 | 104.29 | 103.12 | 104.22 | 103.26 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 59.01 + 48.82 – —
= 107.83
The cash conversion cycle of W.W. Grainger Inc. has shown some fluctuations over the past eight quarters. In Q1 2023, the cash conversion cycle was at its highest at 98.35 days, indicating that it took the company longer to convert its investments in inventory and accounts receivable into cash. This was followed by a slight decrease in Q2 and Q3 2023 to 95.12 days and 96.65 days, respectively.
However, in Q4 2023, the cash conversion cycle increased again to 96.53 days. Comparing with the same quarter in the previous year, there was a slight improvement from 98.06 days in Q4 2022. Overall, the company seems to have been managing its inventory and receivables more efficiently in the last two quarters of 2022, with the lowest cash conversion cycle being 91.69 days in Q1 2022.
It is essential for W.W. Grainger Inc. to monitor and manage its cash conversion cycle effectively to ensure that it minimizes the time taken to convert investments into cash. This can help improve liquidity, reduce working capital requirements, and enhance overall financial performance.