HNI Corp (HNI)
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 | 30.51 | 29.04 | 31.48 | 26.49 | 28.39 |
| Days of sales outstanding (DSO) | days | 37.05 | 33.75 | 40.10 | 38.96 | 44.77 |
| Number of days of payables | days | 30.06 | 26.66 | 40.53 | 36.62 | 39.52 |
| Cash conversion cycle | days | 37.50 | 36.14 | 31.05 | 28.83 | 33.64 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 30.51 + 37.05 – 30.06
= 37.50
The cash conversion cycle of HNI Corp has shown fluctuations over the past five years. In 2023, the cash conversion cycle increased to 37.50 days from 36.14 days in 2022. This indicates that the company took longer to convert its investments in inventory and other resources into cash during the year.
Comparing this to previous years, the cycle was the longest in 2023 among the last five years, which may suggest potential issues with inventory management, collection of receivables, or payment of payables.
In 2021, the cash conversion cycle was shorter at 31.05 days, indicating a quicker conversion of investments into cash compared to 2020 and 2019. However, it increased in 2022 and further in 2023.
Overall, the trend in the cash conversion cycle suggests varying efficiency in managing working capital and converting resources into cash over the past five years. Further analysis of the components contributing to this cycle is necessary to identify areas for improvement in HNI Corp's cash management practices.