Kratos Defense & Security Solutions (KTOS)

The analysis of Kratos Defense & Security Solutions’ Days of Sales Outstanding (DSO) over the period from December 31, 2020, to December 31, 2024, indicates a trend of overall improvement in receivables collection efficiency.

In 2020, the DSO was 132.93 days, suggesting that it took approximately four and a half months on average to collect receivables. This figure slightly decreased to 128.05 days in 2021, reflecting a marginal improvement in receivables turnover. However, in 2022, the DSO increased again to 133.48 days, indicating a potential slowdown in collection processes or changes in credit policies that extended the receivables collection period.

A notable development occurred in 2023, when the DSO decreased to 115.86 days. This reduction signifies a substantial improvement in accounts receivable collection efficiency, with the company moving closer to more typical industry standards and possibly reducing the period of cash conversion. The positive trend continued into 2024, with a further decrease in DSO to 104.01 days, representing an overall reduction of approximately 28.92 days from 2020 levels and a decrease of about 11.85 days from 2023.

This downward trend suggests enhancements in credit management, collection practices, or a shift in customer payment behaviors. Decreasing DSO reduces the cash conversion cycle, potentially improving liquidity and freeing up resources for operational needs or strategic investments. The consistent year-over-year decline in DSO toward the end of the analyzed period indicates a strengthening of the company's receivables collection efficiency and financial flexibility.

Peer comparison

Dec 31, 2024