Kadant Inc (KAI)
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 | 59.42 | 69.84 | 78.28 | 71.64 | 69.34 |
| Days of sales outstanding (DSO) | days | 49.48 | 51.42 | 53.05 | 54.71 | 53.22 |
| Number of days of payables | days | 20.77 | 19.26 | 27.77 | 31.59 | 20.94 |
| Cash conversion cycle | days | 88.13 | 102.00 | 103.56 | 94.75 | 101.62 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 59.42 + 49.48 – 20.77
= 88.13
The cash conversion cycle of Kadant Inc has shown fluctuations over the past five years. As of December 31, 2020, the company's cash conversion cycle stood at 101.62 days, indicating the time it takes for the company to convert its investments in inventory and accounts receivable into cash receipts from customers.
Over the subsequent years, the cash conversion cycle decreased to 94.75 days by December 31, 2021, suggesting an improvement in the company's efficiency in managing its working capital. However, by December 31, 2022, the cycle increased to 103.56 days, indicating a potential delay in converting investments into cash.
As of December 31, 2023, the cash conversion cycle remained relatively stable at 102.00 days, reflecting consistency in the company's working capital management practices. The cycle then significantly decreased to 88.13 days by December 31, 2024, showcasing an improvement in the company's ability to swiftly convert investments into cash.
Overall, Kadant Inc's cash conversion cycle exhibited fluctuations over the years, with periods of improvement and some increases. It is essential for the company to continually assess and optimize its working capital management processes to enhance overall efficiency and financial performance.
Peer comparison
Dec 31, 2024