Hanesbrands Inc (HBI)
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 | 91.31 | 123.61 | 92.08 | 80.33 | 111.18 |
| Days of sales outstanding (DSO) | days | 36.17 | 42.29 | 48.38 | 45.85 | 42.78 |
| Number of days of payables | days | 49.14 | 57.29 | 70.62 | 52.38 | 55.95 |
| Cash conversion cycle | days | 78.34 | 108.61 | 69.84 | 73.80 | 98.01 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 91.31 + 36.17 – 49.14
= 78.34
The cash conversion cycle of Hanesbrands Inc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle improved significantly to 78.34 days compared to the previous year, indicating that the company was able to convert its investments in inventory and receivables into cash more efficiently. This could be attributed to effective inventory management and quicker collection of receivables.
On the other hand, in 2022, the cash conversion cycle increased to 108.61 days, indicating a potential slowdown in inventory turnover or collection of receivables. The company took longer to convert its investments into cash, which may have impacted its liquidity position.
In 2021, the cash conversion cycle decreased to 69.84 days, showing a positive trend in the company's working capital management. Hanesbrands Inc was able to streamline its operations and convert its resources into cash more quickly.
In 2020, the cash conversion cycle was 73.80 days, a slight improvement from the previous year. The company continued to manage its working capital efficiently, although not as effectively as in 2021.
In 2019, the cash conversion cycle was 98.01 days, indicating a longer period to convert resources into cash compared to the subsequent years. This may suggest challenges in managing working capital efficiently or potential issues with inventory turnover and receivables collection.
Overall, the fluctuation in Hanesbrands Inc's cash conversion cycle over the years reflects varying levels of efficiency in managing working capital and converting investments into cash. The company's ability to maintain a shorter cash conversion cycle indicates better liquidity and operational efficiency.