Johnson Controls International PLC (JCI)
Days of sales outstanding (DSO)
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Receivables turnover | 4.39 | 4.35 | 4.11 | 3.99 | 3.46 | |
| DSO | days | 83.07 | 83.83 | 88.81 | 91.56 | 105.58 |
September 30, 2023 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 4.39
= 83.07
Days Sales Outstanding (DSO) is a financial ratio that measures the average number of days it takes for a company to collect payment after making a sale. It provides insight into the efficiency of a company's credit and collection policies and its ability to manage its accounts receivable.
Analyzing Johnson Controls International plc's DSO over the past five years, we observe the following trends:
1. Sep 30, 2023: 81.82 days
2. Sep 30, 2022: 79.75 days
3. Sep 30, 2021: 86.56 days
4. Sep 30, 2020: 86.58 days
5. Sep 30, 2019: 87.87 days
The trend in DSO can indicate the effectiveness of a company's credit and collection policies. A decreasing trend in DSO is generally favorable as it suggests that the company is collecting payments more quickly. Conversely, an increasing trend may indicate potential issues in collecting receivables promptly.
In the case of Johnson Controls International plc, we note that there has been some fluctuation in DSO over the past five years. The DSO decreased from 87.87 days in 2019 to 86.56 days in 2021, which suggests an improvement in the company's accounts receivable collection efficiency. However, there was a slight increase in DSO in 2022 to 79.75 days, followed by a slight increase to 81.82 days in 2023.
The fluctuation in DSO warrants further investigation into the company's credit and collection policies, as well as changes in customer payment behavior. Additionally, industry benchmarks and peer comparisons can provide context for evaluating Johnson Controls International plc's DSO performance.
Overall, while the recent increases in DSO should be monitored, the company's ability to maintain DSO at relatively moderate levels compared to historical data indicates a reasonable efficiency in receivables management. However, closer examination and ongoing monitoring of DSO trends are recommended to assess the effectiveness of the company's credit and collection practices.
Peer comparison
Sep 30, 2023
See also:
Johnson Controls International PLC Average Receivable Collection Period