Ingersoll Rand Inc (IR)
Days of sales outstanding (DSO)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Receivables turnover | 5.57 | 5.27 | 5.43 | 4.11 | 4.39 | |
| DSO | days | 65.51 | 69.22 | 67.20 | 88.80 | 83.06 |
December 31, 2023 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 5.57
= 65.51
In reviewing the Days of Sales Outstanding (DSO) trend for Ingersoll-Rand Inc from 2019 to 2023, it is evident that there has been some fluctuation in the efficiency of the company's accounts receivable management.
The DSO metric represents the average number of days it takes for a company to collect revenue after a sale is made. In 2023, the DSO decreased to 65.51 days from 69.22 days in 2022, showing an improvement in the company's ability to collect payments from customers more promptly. This indicates enhanced efficiency in managing accounts receivable.
Comparing the DSO to 2021 and 2020, where values were 67.20 days and 71.85 days respectively, the decreasing trend demonstrates consistent progress in collections management over the years.
It is important to note that a lower DSO is generally preferable as it signifies that the company is collecting payments more quickly, thereby improving cash flow and liquidity. However, it is crucial for Ingersoll-Rand Inc to maintain a balance between prompt collections and maintaining good customer relationships.
Overall, the decreasing trend in Days of Sales Outstanding for Ingersoll-Rand Inc reflects an improvement in the company's accounts receivable management efficiency, which can positively impact their financial health and liquidity position.
Peer comparison
Dec 31, 2023