Illinois Tool Works Inc (ITW)
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 | 65.95 | 73.90 | 73.26 | 73.04 | 66.88 | 70.51 | 74.87 | 77.55 | 79.51 | 78.68 | 79.78 | 78.04 | 72.84 | 67.04 | 62.99 | 62.52 | 58.85 | 56.70 | 56.84 | 54.07 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 65.95 | 73.90 | 73.26 | 73.04 | 66.88 | 70.51 | 74.87 | 77.55 | 79.51 | 78.68 | 79.78 | 78.04 | 72.84 | 67.04 | 62.99 | 62.52 | 58.85 | 56.70 | 56.84 | 54.07 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 65.95 + — – —
= 65.95
The cash conversion cycle for Illinois Tool Works Inc has shown fluctuations over the years, ranging from a low of 54.07 days on March 31, 2020, to a high of 79.78 days on June 30, 2022. The cash conversion cycle measures the time it takes for a company to convert its investment in inventory and other inputs into cash flows from sales to customers.
A longer cash conversion cycle can indicate inefficiencies in the company's operations, such as slow inventory turnover or longer accounts receivable collection periods, which may tie up cash and impact liquidity. On the other hand, a shorter cash conversion cycle suggests that the company is able to quickly convert its investments into revenue, which can enhance cash flow and overall financial health.
For Illinois Tool Works Inc, the upward trend in the cash conversion cycle from the first quarter of 2022 to the fourth quarter of 2024 may suggest potential challenges in managing inventory, accounts receivable, and accounts payable effectively. It is important for the company to closely monitor and optimize its cash conversion cycle to ensure efficient working capital management and sustainable growth.
Peer comparison
Dec 31, 2024
See also:
Illinois Tool Works Inc Cash Conversion Cycle (Quarterly Data)