Hexcel Corporation (HXL)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	80.05	79.77	84.27	72.59	53.98
Days of sales outstanding (DSO)	days	40.66	48.73	52.73	45.48	31.34
Number of days of payables	days	31.98	37.95	41.04	33.45	17.70
Cash conversion cycle	days	88.73	90.55	95.96	84.63	67.62

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 80.05 + 40.66 – 31.98
= 88.73

Hexcel Corporation's cash conversion cycle has shown an increasing trend over the past five years, starting at 67.62 days on December 31, 2020, and reaching its peak at 95.96 days on December 31, 2022. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

A longer cash conversion cycle may indicate inefficiencies in managing inventory, accounts receivable, and accounts payable, resulting in tied-up capital and potential liquidity issues. It is crucial for Hexcel Corporation to closely monitor and potentially improve its cash conversion cycle to enhance operational efficiency, optimize working capital management, and ensure a healthy cash flow position for sustainable growth and financial stability.