Innospec Inc (IOSP)

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	62.06	77.74	76.06	69.23	66.00
Days of sales outstanding (DSO)	days	67.39	62.19	70.00	67.78	70.48
Number of days of payables	days	33.83	34.44	40.74	31.06	32.92
Cash conversion cycle	days	95.62	105.49	105.32	105.95	103.56

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 62.06 + 67.39 – 33.83
= 95.62

The cash conversion cycle for Innospec Inc has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle was 104.08 days, which was an improvement compared to the previous year. This indicates that Innospec is managing its cash more efficiently in the most recent financial year.

In general, a lower cash conversion cycle is beneficial as it signifies that the company is able to convert its investments in inventory into cash quickly. This can be a sign of effective inventory management and efficient working capital utilization.

Despite the fluctuations, Innospec has generally maintained a cash conversion cycle within a range of around 100 to 120 days over the past five years. This suggests that the company has been able to strike a balance between managing its inventory levels and collecting cash from its sales.

Overall, the trend in the cash conversion cycle for Innospec Inc shows that the company has been implementing effective strategies in managing its cash flow, inventory, and accounts receivable over the years, leading to improved efficiency in converting its operating assets into cash.