Innospec Inc (IOSP)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	61.86	70.16	67.88	63.84	62.25	68.55	72.03	74.86	78.07	83.92	85.73	78.13	76.52	80.83	79.93	72.37	69.98	72.70	68.74	67.43
Days of sales outstanding (DSO)	days	67.58	63.82	57.87	59.88	67.39	56.70	56.35	62.46	62.19	66.99	71.74	76.27	70.00	80.08	80.98	78.03	67.78	59.13	56.46	72.24
Number of days of payables	days	33.66	37.13	31.98	34.91	33.93	30.21	31.89	36.38	34.59	38.16	42.82	41.02	40.99	40.43	39.41	37.14	31.40	24.80	20.91	29.71
Cash conversion cycle	days	95.77	96.85	93.77	88.81	95.70	95.03	96.50	100.95	105.68	112.75	114.65	113.38	105.53	120.48	121.51	113.26	106.37	107.03	104.29	109.96

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 61.86 + 67.58 – 33.66
= 95.77

The cash conversion cycle of Innospec Inc has shown fluctuations over the analyzed period. The cycle represents the time it takes for the company to convert its resources invested in inventory into cash flows from sales.

From March 31, 2020, to December 31, 2021, the cash conversion cycle ranged between approximately 104 to 121 days. This indicates that Innospec's management of its operating cycle was relatively stable during this period, with a slight increase towards the end of 2021.

Subsequently, from March 31, 2022, to March 31, 2024, the cash conversion cycle showed a declining trend, reaching as low as 88.81 days by the end of March 2024. This decrease suggests that the company may have improved its efficiency in managing working capital, inventory, and accounts receivable.

Overall, a lower cash conversion cycle indicates improved efficiency and liquidity management, allowing Innospec Inc to better utilize its resources and generate cash flows. However, it's essential to monitor this metric regularly to ensure optimal management of the company's working capital and overall financial health.