Innospec Inc (IOSP)

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	61.56	62.06	77.74	76.06	69.23
Days of sales outstanding (DSO)	days	67.58	67.39	62.19	70.00	67.78
Number of days of payables	days	33.50	33.83	34.44	40.74	31.06
Cash conversion cycle	days	95.64	95.62	105.49	105.32	105.95

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 61.56 + 67.58 – 33.50
= 95.64

The cash conversion cycle of Innospec Inc has shown a relatively stable trend over the past five years. It decreased from 105.95 days as of December 31, 2020, to 95.64 days as of December 31, 2024. This indicates that the company has been able to manage its working capital more efficiently over the period, reducing the time it takes to convert its investments in inventory and other resources into cash.

A lower cash conversion cycle suggests that the company is managing its inventory, accounts receivable, and accounts payable effectively. This could be a result of improved inventory management, quicker collection of receivables, and optimized payment terms with suppliers. Overall, a decreasing trend in the cash conversion cycle is a positive indicator of operational efficiency and liquidity management within the company. Further monitoring of this metric will be essential to ensure sustainable working capital management in the future.