Insteel Industries Inc (IIIN)
Cash conversion cycle
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 59.96 | 62.07 | 76.88 | 75.93 | 92.71 | 139.40 | 145.47 | 104.79 | 106.50 | 103.00 | 97.12 | 102.17 | 66.20 | 55.80 | 61.92 | 58.58 | 53.08 | 57.31 | 87.32 | 102.85 |
| Days of sales outstanding (DSO) | days | 28.01 | 35.66 | 34.48 | — | 30.69 | 36.07 | — | — | — | 41.97 | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | 15.19 | 20.64 | 21.99 | 20.55 | 16.68 | 33.00 | 58.32 | 48.22 | 46.19 | 64.42 | 82.19 | 66.91 | 32.71 | 31.53 | 39.93 | 31.41 | 25.97 | 17.47 | 26.13 | 30.82 |
| Cash conversion cycle | days | 72.78 | 77.09 | 89.37 | 55.38 | 106.73 | 142.46 | 87.15 | 56.57 | 60.31 | 80.54 | 14.93 | 35.26 | 33.49 | 24.28 | 21.99 | 27.17 | 27.12 | 39.84 | 61.19 | 72.03 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 59.96 + 28.01 – 15.19
= 72.78
The cash conversion cycle of Insteel Industries Inc has varied over the past several quarters. In general, the cash conversion cycle represents the amount of time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is typically preferred as it indicates that the company is able to generate cash quickly from its operations.
Analyzing the data provided, we can see that Insteel Industries Inc's cash conversion cycle fluctuated between 14.93 days to 142.46 days over the past five years. The company experienced its longest cash conversion cycle in the third quarter of 2022, indicating potential challenges in converting inventory and receivables into cash during that period. On the other hand, the shortest cash conversion cycle was observed in the second quarter of 2021, suggesting improved efficiency in managing cash flows and working capital.
Overall, Insteel Industries Inc should aim to keep its cash conversion cycle as low and consistent as possible to ensure optimal utilization of resources and timely cash generation from its operations. Monitoring and managing factors such as inventory turnover, accounts receivable collection period, and accounts payable payment period will be crucial in improving the company's cash conversion cycle and overall liquidity position.
Peer comparison
Dec 31, 2023