Hillenbrand Inc (HI)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 115.19 | 114.24 | 99.55 | 82.57 | 48.60 |
| Days of sales outstanding (DSO) | days | 85.10 | 82.86 | 72.53 | 60.56 | 80.48 |
| Number of days of payables | days | 87.76 | 87.28 | 87.39 | 58.19 | 70.42 |
| Cash conversion cycle | days | 112.53 | 109.82 | 84.70 | 84.94 | 58.66 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 115.19 + 85.10 – 87.76
= 112.53
The cash conversion cycle (CCC) of Hillenbrand Inc has shown fluctuations over the past five years. In 2023, the CCC increased to 112.53 days from 83.76 days in 2022. This indicates that, on average, it took the company 112.53 days to convert its resource inputs into cash receipts from sales. This increase in the CCC may suggest that Hillenbrand Inc is taking longer to sell its inventory and collect cash from its customers, which could lead to a strain on its working capital.
Comparing 2023 to 2021, the CCC has increased from 66.37 days to 112.53 days. This substantial increase indicates that the company's ability to convert its resources into cash has worsened over the past two years.
Conversely, in 2019, the CCC was 62.11 days, showing an improvement in the efficiency of Hillenbrand Inc's cash conversion cycle. The increase in the CCC from 2019 to 2020, followed by further fluctuations, suggests potential inefficiencies in inventory management and/or collection of receivables during these periods.
Overall, the increasing trend in the CCC over the past five years for Hillenbrand Inc may warrant a closer examination of its working capital management and operational efficiency to identify areas for improvement.
Peer comparison
Sep 30, 2023