Insteel Industries Inc (IIIN)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 64.59 | 114.60 | 61.51 | 60.39 | 60.76 |
| Days of sales outstanding (DSO) | days | 35.66 | 36.04 | 41.97 | 41.56 | 36.36 |
| Number of days of payables | days | 21.47 | 27.13 | 38.47 | 34.12 | 18.52 |
| Cash conversion cycle | days | 78.78 | 123.51 | 65.01 | 67.83 | 78.60 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 64.59 + 35.66 – 21.47
= 78.78
The cash conversion cycle (CCC) of Insteel Industries, Inc. has fluctuated over the past five years, indicating changes in the company's efficiency in managing its working capital. In 2023, the CCC decreased to 78.78 days from 123.51 days in 2022, reflecting an improvement in the company's ability to convert its inventory into cash. This reduction may suggest better inventory management or improved accounts receivable collection processes. However, it is important to note that despite the improvement from 2022 to 2023, the CCC is still higher than the level in 2021, which was 65.01 days. The increase in 2022 could signify a slower receivables collection or a longer inventory turnover, negatively impacting the company's cash conversion cycle.
Additionally, when comparing the 2023 CCC to the levels in 2020 and 2019, it is evident that the company's efficiency in converting its resources into cash has improved compared to 2020, when the CCC was 67.83 days, but has not reverted to the level seen in 2019, which was 78.60 days. This fluctuation in the cash conversion cycle suggests that Insteel Industries, Inc. has experienced varying levels of efficiency in managing its cash, inventory, and accounts receivable over the past five years. Further analysis would be needed to determine the specific drivers behind these fluctuations and to assess the sustainability of the improvements seen in 2023.
Peer comparison
Sep 30, 2023