Warrior Met Coal Inc (HCC)
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 | 58.59 | 59.41 | 31.03 | 57.24 | 40.18 |
| Days of sales outstanding (DSO) | days | 23.66 | 32.70 | 45.43 | 41.16 | 32.59 |
| Number of days of payables | days | 11.54 | 15.05 | 17.61 | 28.50 | 19.06 |
| Cash conversion cycle | days | 70.70 | 77.05 | 58.85 | 69.90 | 53.71 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 58.59 + 23.66 – 11.54
= 70.70
Warrior Met Coal Inc's cash conversion cycle has fluctuated over the past five years, ranging from a low of 57.90 days in 2019 to a high of 89.55 days in 2022. The cash conversion cycle represents the time it takes for the company to convert its investments in raw materials into cash flows from sales, taking into account the time it takes to sell inventory, collect receivables, and pay suppliers.
A higher number of days in the cash conversion cycle may indicate inefficiencies in inventory management, slow collection of receivables, or extended payment terms with suppliers. Conversely, a lower number of days suggests a more efficient working capital management system.
The improvement in the cash conversion cycle from 2022 to 2023 indicates that Warrior Met Coal Inc has been able to enhance its cash flow management efficiency, potentially through better inventory management, faster collection of receivables, or more favorable payment terms with suppliers. It is important for the company to continue monitoring and optimizing its cash conversion cycle to ensure optimal liquidity and operational effectiveness.
Peer comparison
Dec 31, 2023