Kratos Defense & Security Solutions (KTOS)
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 | 69.68 | 74.19 | 68.14 | 57.08 | 54.43 |
| Days of sales outstanding (DSO) | days | 104.01 | 115.86 | 133.48 | 128.05 | 132.93 |
| Number of days of payables | days | 35.25 | 29.97 | 31.11 | 31.37 | 37.14 |
| Cash conversion cycle | days | 138.44 | 160.08 | 170.50 | 153.76 | 150.22 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 69.68 + 104.01 – 35.25
= 138.44
The cash conversion cycle (CCC) of Kratos Defense & Security Solutions has exhibited fluctuations over the analyzed period from December 31, 2020, to December 31, 2024. At the end of 2020, the CCC stood at approximately 150.22 days, reflecting the number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales. The cycle experienced an incremental increase in 2021, reaching approximately 153.76 days, indicating a slight elongation in the time required to complete this cycle. This upward trend continued into 2022, with the CCC rising further to approximately 170.50 days, suggesting potential delays or inefficiencies in inventory turnover, receivables collection, or payables management during that year.
Subsequently, there was a notable reduction in the CCC in 2023, decreasing to around 160.08 days. This decline reflects a partial improvement in the company's cash conversion efficiency, potentially due to better receivables collection processes, faster inventory turnover, or more favorable payables terms. Continuing this positive trend, the CCC further shortened to approximately 138.44 days by the end of 2024, marking a significant reduction of about 21.64 days from the 2022 peak. This reduction indicates a more efficient working capital management, allowing the company to convert its investments into cash more rapidly than in previous years.
Overall, the company's cash conversion cycle demonstrated substantial variability during this period, with a peak in 2022 followed by a consistent downward trend through 2023 and 2024. The reduction in the CCC by 2024 suggests an enhancement in operational efficiencies and working capital management, potentially contributing to improved liquidity and overall financial health.
Peer comparison
Dec 31, 2024