Ingersoll Rand Inc (IR)
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 | 91.49 | 104.23 | 98.54 | 101.86 | 148.01 |
| Days of sales outstanding (DSO) | days | 65.51 | 69.22 | 67.20 | 88.80 | 83.06 |
| Number of days of payables | days | 73.22 | 79.16 | 77.35 | 76.23 | 95.11 |
| Cash conversion cycle | days | 83.78 | 94.30 | 88.39 | 114.42 | 135.96 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 91.49 + 65.51 – 73.22
= 83.78
The cash conversion cycle for Ingersoll-Rand Inc has shown a fluctuating trend over the past five years. In 2023, the company's cash conversion cycle decreased to 83.78 days from 94.30 days in 2022. This indicates an improvement in the efficiency of the company's working capital management.
Comparing to previous years, the cash conversion cycle was 88.39 days in 2021, 102.02 days in 2020, and 110.91 days in 2019, showing a downward trend in the number of days it takes for the company to convert its investments in inventory and other resources into cash.
A decreasing cash conversion cycle suggests that Ingersoll-Rand Inc is managing its inventory, accounts receivable, and accounts payable more effectively, leading to a shorter time frame in which it can convert its sales into cash. This improvement may indicate enhanced operational efficiency and potentially better financial performance for the company.
Overall, the downward trend in the cash conversion cycle over the past five years is a positive sign for Ingersoll-Rand Inc, reflecting improved working capital management and suggesting potential strengths in the company's financial operations.
Peer comparison
Dec 31, 2023