Hexcel Corporation (HXL)

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	79.77	84.27	72.59	53.98	64.64
Days of sales outstanding (DSO)	days	48.73	52.73	45.48	31.34	35.96
Number of days of payables	days	37.95	41.04	33.45	17.70	30.58
Cash conversion cycle	days	90.55	95.96	84.63	67.62	70.02

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 79.77 + 48.73 – 37.95
= 90.55

The cash conversion cycle of Hexcel Corp. has shown some variation over the past five years. In 2023, the cash conversion cycle was 95.08 days, slightly decreasing from 100.50 days in 2022. This indicates that the company took slightly less time to convert its investments in inventory and accounts receivable into cash in 2023 compared to the previous year.

However, looking back further, the cash conversion cycle was higher in 2021 at 89.17 days compared to 71.95 days in 2020 and 72.61 days in 2019. This suggests that Hexcel Corp. improved its efficiency in managing its working capital in 2020 and 2019, resulting in a shorter cash conversion cycle during those years.

Overall, Hexcel Corp. has experienced fluctuations in its cash conversion cycle over the past five years, with some improvements in efficiency demonstrated in certain years. This metric is crucial for assessing the company's ability to convert its resources into cash effectively, and fluctuations in the cycle may indicate changes in the company's operational efficiency and liquidity management.