ITT Inc (ITT)

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 90.54 97.88 90.12 98.88 96.53 97.10 97.93 98.96 94.35 95.80 100.28 91.18 84.31 79.73 81.15 79.93 77.60 81.42 79.01 72.94
Days of sales outstanding (DSO) days 70.67 82.91 74.34 80.83 75.07 76.20 79.62 79.92 76.82 79.20 78.00 80.48 73.28 73.34 75.10 79.35 74.76 71.91 64.80 74.43
Number of days of payables days 70.20 72.62 68.82 74.51 73.31 69.00 69.42 69.27 70.88 71.28 78.34 78.79 73.06 65.91 67.49 69.75 66.04 64.64 55.67 61.78
Cash conversion cycle days 91.01 108.16 95.65 105.20 98.29 104.30 108.13 109.61 100.29 103.72 99.94 92.87 84.53 87.15 88.76 89.53 86.32 88.69 88.14 85.59

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 90.54 + 70.67 – 70.20
= 91.01

The cash conversion cycle is a crucial financial metric that indicates the efficiency of a company in converting its investments in inventory into cash receipts from sales. For ITT Inc, the cash conversion cycle has shown some fluctuations over the periods analyzed.

From March 31, 2020, to June 30, 2024, ITT Inc's cash conversion cycle ranged from a low of 84.53 days to a high of 109.61 days. A lower cash conversion cycle suggests that the company takes less time to convert its investments in inventory into cash, which is generally seen as positive as it indicates better liquidity and efficiency in the company's operations.

It is notable that the cash conversion cycle increased steadily from March 31, 2020, to December 31, 2021, peaking at 92.87 days, before decreasing slightly by the end of June 2024 to 95.65 days. A rising cash conversion cycle can be indicative of inefficiencies in inventory management or collection of receivables, potentially leading to liquidity challenges.

Overall, ITT Inc should closely monitor its cash conversion cycle to ensure that it remains at optimal levels. By effectively managing inventory levels, accounts receivable, and accounts payable, the company can work towards reducing the cycle time, thus improving cash flow and overall financial health.