JBTMarel Corp (JBTM)
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 | 78.09 | 80.84 | 90.83 | 91.02 | 60.31 |
| Days of sales outstanding (DSO) | days | 71.28 | 63.36 | 60.96 | 86.90 | 64.30 |
| Number of days of payables | days | 43.89 | 45.54 | 58.69 | 73.90 | 43.01 |
| Cash conversion cycle | days | 105.48 | 98.65 | 93.09 | 104.02 | 81.61 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 78.09 + 71.28 – 43.89
= 105.48
The analysis of JBTMarel Corp’s cash conversion cycle (CCC) over the period from December 31, 2020, to December 31, 2024, reveals fluctuations in the company's liquidity management efficiency.
In 2020, the CCC was approximately 81.61 days, indicating the company took about 81.6 days to convert its investments in inventory and receivables into cash, considering the length of its payables period. This suggests a relatively efficient management of cash flow at that time.
By the end of 2021, the CCC increased to approximately 104.02 days, reflecting a deterioration in cash conversion efficiency. The lengthening of the cycle could be attributable to longer inventory holding periods, increased days sales outstanding, or changes in payment terms. This increase indicates that the company was taking more time to convert its working capital into cash, which could potentially impact liquidity.
In 2022, the CCC decreased to approximately 93.09 days, demonstrating a partial recovery and an improvement in working capital management. This reduction suggests that the company managed to shorten its cash conversion cycle, possibly through better inventory management or improved receivables collection processes.
However, in 2023, the CCC increased again to approximately 98.65 days, showing a trend of elongation in the cycle. This indicates a slight reversal of the previous efficiency gains, with the company taking longer to convert working capital into cash.
Most recently, in 2024, the CCC rose further to approximately 105.48 days, marking the longest duration within the analyzed period. This upward trend could signal emerging inefficiencies in working capital management, such as slower receivables, increased inventory levels, or extended payables periods.
Overall, the company's cash conversion cycle has exhibited variability, with a general trend toward elongation from 2020 through 2024. The increase in the CCC over this period suggests that JBTMarel Corp has experienced challenges in efficiently managing its working capital, which could have implications for cash flow and liquidity management. Continued focus on optimizing inventory turnover, receivables collection, and payables management would be advisable to enhance operating efficiency and ensure sustainable liquidity.
Peer comparison
Dec 31, 2024