Ingersoll Rand Inc (IR)

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 94.73 91.49 104.23 98.54 101.86
Days of sales outstanding (DSO) days 67.37 65.51 69.22 67.20 88.80
Number of days of payables days 75.75 73.22 79.16 77.35 76.23
Cash conversion cycle days 86.35 83.78 94.30 88.39 114.42

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 94.73 + 67.37 – 75.75
= 86.35

The cash conversion cycle for Ingersoll Rand Inc has shown a decreasing trend over the past five years. From 114.42 days at the end of 2020, it decreased to 88.39 days by the end of 2021, indicating an improvement in the company's efficiency in managing its cash flows. However, in 2022, the cash conversion cycle slightly increased to 94.30 days before decreasing again to 83.78 days in 2023. By the end of 2024, the cycle stood at 86.35 days.

A decreasing cash conversion cycle suggests that Ingersoll Rand Inc is taking less time to convert its investments in inventory into cash receipts from sales, which can indicate improved liquidity and operational efficiency. Overall, the trend indicates that the company has been effective in managing its working capital and optimizing its cash flow processes over the years.