Kadant Inc (KAI)
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 | 59.42 | 71.27 | 75.00 | 76.54 | 69.84 | 75.57 | 82.61 | 85.86 | 103.77 | 99.61 | 102.01 | 97.31 | 71.64 | 103.84 | 95.17 | 100.09 | 97.27 | 97.45 | 94.58 | 84.66 |
| Days of sales outstanding (DSO) | days | 49.48 | 55.52 | 54.93 | 56.41 | 51.42 | 54.34 | 53.73 | — | 53.05 | — | — | — | 54.71 | — | — | — | — | — | — | — |
| Number of days of payables | days | 20.77 | 21.28 | 23.52 | 24.74 | 19.26 | 20.36 | 22.91 | 27.76 | 36.81 | 34.04 | 36.47 | 45.93 | 31.59 | 40.99 | 36.70 | 34.66 | 29.38 | 29.21 | 34.43 | 33.95 |
| Cash conversion cycle | days | 88.13 | 105.51 | 106.41 | 108.21 | 102.00 | 109.55 | 113.43 | 58.10 | 120.01 | 65.58 | 65.54 | 51.39 | 94.75 | 62.85 | 58.47 | 65.43 | 67.89 | 68.24 | 60.15 | 50.71 |
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 fluctuated over the period under review, indicating varying efficiency in managing its working capital. The cash conversion cycle represents the number of days it takes for a company to convert its resources invested in inventory and accounts receivable back into cash.
From March 31, 2020, to June 30, 2022, the company's cash conversion cycle remained relatively stable, with fluctuations within a reasonable range. However, from December 31, 2022, onwards, there is a significant increase in the cash conversion cycle, peaking at 120.01 days by December 31, 2022.
This increase in the cash conversion cycle can signal potential issues in managing inventory, collecting receivables, or maybe an extended payment period for suppliers. A longer cash conversion cycle implies that the company is taking more time to generate cash from its operations, which can impact liquidity and operational efficiency.
It is essential for Kadant Inc to monitor and potentially improve its cash conversion cycle to ensure optimal working capital management and sustainable business operations. By efficiently managing inventory levels, speeding up receivables collection, and optimizing payment cycles, the company can reduce its cash conversion cycle, leading to improved financial health and operational performance.
Peer comparison
Dec 31, 2024