Hilton Grand Vacations Inc (HGV)
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 | 962.34 | 1,004.83 | — | — | — |
| Days of sales outstanding (DSO) | days | 46.52 | 48.63 | 47.21 | 48.59 | 34.55 |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 1,008.85 | 1,053.47 | 47.21 | 48.59 | 34.55 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 962.34 + 46.52 – —
= 1,008.85
The cash conversion cycle of Hilton Grand Vacations Inc has varied significantly over the past five years. In 2023, the cash conversion cycle increased to 2,409.61 days from 1,495.60 days in 2022, indicating a significant deterioration in the company's efficiency in managing its cash resources. This high number suggests that the company takes a long time to convert its investments in inventory into cash from sales.
In 2021, the cash conversion cycle also deteriorated to 2,142.03 days from 9,564.66 days in 2020, which was an exceptionally high number, indicating a notable improvement in the company's cash management efficiency. The sharp decrease in 2021 suggests that the company was able to better manage its working capital and convert its inventory and receivables into cash more effectively.
Comparing these figures to the more favorable cash conversion cycle of 1,589.40 days in 2019, it is clear that Hilton Grand Vacations Inc has experienced fluctuations in its cash management efficiency. The company's management should focus on optimizing inventory levels, improving collection processes, and managing supplier payment timing to enhance its cash conversion cycle and overall financial performance.