Howmet Aerospace Inc (HWM)
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 | 119.01 | 124.82 | 120.98 | 117.28 | 42.95 |
| Days of sales outstanding (DSO) | days | 39.33 | 36.08 | 33.58 | 44.72 | 38.17 |
| Number of days of payables | days | 66.22 | 74.63 | 63.16 | 47.21 | 26.08 |
| Cash conversion cycle | days | 92.13 | 86.27 | 91.39 | 114.79 | 55.03 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 119.01 + 39.33 – 66.22
= 92.13
The cash conversion cycle of Howmet Aerospace Inc has shown some variability over the past five years. The company's cash conversion cycle was 97.92 days at the end of 2023, representing a slight increase from the previous year. This indicates that, on average, it takes Howmet Aerospace approximately 98 days to convert its investment in inventory into cash.
Comparing this to earlier years, we observed a relatively stable trend until 2020 when the cash conversion cycle spiked to 108.45 days, before decreasing to 92.17 days in 2022. The significant increase in 2020 suggests potential challenges in managing inventory levels or collection of receivables that year. However, the subsequent improvements in 2022 and 2023 indicate efforts to enhance efficiency in working capital management.
It is worth noting that the cash conversion cycle was notably lower at 49.87 days in 2019, which may indicate more efficient inventory management or quicker conversion of sales into cash during that period. Overall, monitoring and managing the cash conversion cycle is crucial for ensuring optimal liquidity and operational efficiency within Howmet Aerospace Inc.
Peer comparison
Dec 31, 2023