Warrior Met Coal Inc (HCC)
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 | 59.58 | 58.59 | 59.41 | 31.03 | 57.24 |
| Days of sales outstanding (DSO) | days | 33.89 | 23.66 | 32.70 | 45.43 | 41.16 |
| Number of days of payables | days | 11.53 | 11.54 | 15.05 | 17.61 | 28.50 |
| Cash conversion cycle | days | 81.93 | 70.70 | 77.05 | 58.85 | 69.90 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 59.58 + 33.89 – 11.53
= 81.93
Warrior Met Coal Inc's cash conversion cycle measures the time it takes for the company to convert its investments in inventory and receivables into cash inflows from sales. Looking at the data provided, we observe fluctuations in the cash conversion cycle over the years.
As of December 31, 2020, the cash conversion cycle was 69.90 days, indicating that Warrior Met Coal took about 69.90 days to convert its investments into cash. By the end of December 31, 2021, the cash conversion cycle improved to 58.85 days, showcasing a more efficient operation in converting assets to cash.
However, by December 31, 2022, there was an increase in the cash conversion cycle to 77.05 days, suggesting a potential delay in the company's cash conversion process. The trend continued into December 31, 2023, where the cycle stood at 70.70 days, implying a slight improvement but still higher than the previous year.
Moreover, as of December 31, 2024, the cash conversion cycle peaked at 81.93 days, indicating a significant delay in converting investments into cash compared to the prior years. This trend may raise concerns about the company's efficiency in managing its working capital.
Overall, Warrior Met Coal Inc should focus on optimizing its inventory and receivables management to shorten its cash conversion cycle and improve liquidity and operational efficiency.
Peer comparison
Dec 31, 2024