Hubbell Inc (HUBB)

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	68.88	62.51	64.59	51.23	56.37
Days of sales outstanding (DSO)	days	53.75	55.30	59.82	48.95	54.87
Number of days of payables	days	46.60	44.72	51.98	32.99	30.97
Cash conversion cycle	days	76.03	73.09	72.43	67.19	80.27

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 68.88 + 53.75 – 46.60
= 76.03

The cash conversion cycle is a key indicator of how efficiently a company manages its working capital. Hubbell Inc.'s cash conversion cycle has shown a fluctuating trend over the past five years.

In 2023, the cash conversion cycle increased to 81.57 days from 76.84 days in 2022. This suggests that Hubbell Inc. took longer to convert its investments in inventory into cash. However, the company's performance was better in 2023 compared to 2019 and 2020 when the cash conversion cycle was higher at 86.46 days and 83.46 days, respectively.

Although there was an improvement from 2020 to 2021 with a decrease in the cash conversion cycle to 74.28 days, the company experienced a slight increase in 2022 and 2023. It is essential for Hubbell Inc. to focus on managing its inventory, accounts receivable, and accounts payable efficiently to reduce the cash conversion cycle and improve its working capital management in the future.