Ingersoll Rand Inc (IR)

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 94.73 105.50 106.50 97.13 91.49 100.75 104.04 109.42 104.23 104.67 108.77 105.70 98.54 104.72 100.92 107.29 99.07 187.16 226.05 297.45
Days of sales outstanding (DSO) days 67.37 68.44 67.51 65.71 65.51 66.46 68.97 73.11 69.22 65.97 67.34 69.04 67.20 68.33 72.07 79.58 86.90 113.23 134.80 178.53
Number of days of payables days 75.75 67.50 68.72 64.09 73.22 61.70 63.22 71.24 79.16 72.25 75.22 77.64 77.35 76.75 83.69 86.89 74.14 116.06 150.53 209.02
Cash conversion cycle days 86.35 106.44 105.29 98.75 83.78 105.52 109.79 111.29 94.30 98.39 100.89 97.11 88.39 96.30 89.29 99.99 111.82 184.33 210.32 266.96

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 is a critical financial metric that reflects how efficiently a company manages its cash flow related to inventory, accounts receivable, and accounts payable. For Ingersoll Rand Inc, the cash conversion cycle has shown some fluctuations over the reported periods.

From March 31, 2020, to December 31, 2024, Ingersoll Rand Inc's cash conversion cycle has generally improved, decreasing from 266.96 days to 86.35 days. A lower cash conversion cycle indicates that the company is able to efficiently convert its investments in inventory into cash, collect receivables promptly, and manage its payables effectively.

The trend of decreasing cash conversion cycle indicates that Ingersoll Rand Inc is improving its working capital management and cash flow efficiency. However, it is essential to keep monitoring this metric to ensure continued operational efficiency and financial health.

Overall, the decreasing trend in Ingersoll Rand Inc's cash conversion cycle reflects positively on its ability to manage its working capital effectively and generate cash flow from its core operations. It suggests that the company is becoming more efficient in converting its resources into cash, which is a key indicator of financial stability and performance.