LCI Industries (LCII)
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 | 93.96 | 88.66 | 84.91 | 90.39 | 93.22 | 93.86 | 94.37 | 93.74 | 95.54 | 95.96 | 101.78 | 107.68 | 116.63 | 93.27 | 81.23 | 83.19 | 86.25 | 69.24 | 67.07 | 68.28 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 93.96 | 88.66 | 84.91 | 90.39 | 93.22 | 93.86 | 94.37 | 93.74 | 95.54 | 95.96 | 101.78 | 107.68 | 116.63 | 93.27 | 81.23 | 83.19 | 86.25 | 69.24 | 67.07 | 68.28 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 93.96 + — – —
= 93.96
The cash conversion cycle is a crucial metric that represents the time it takes for a company to convert its investments in inventory into cash flows from sales. It consists of three components: days inventory outstanding (DIO), days sales outstanding (DSO), and days payables outstanding (DPO).
Analyzing the cash conversion cycle data of LCI Industries from March 31, 2020, to December 31, 2024, we observe fluctuations in the cycle duration. The cycle shows a general upward trend from around 68 days in Q1 2020 to approximately 94 days by the end of Q3 2023 before slightly declining to 88.66 days by the end of Q3 2024.
A longer cash conversion cycle indicates that the company is taking more time to convert its investments into cash, potentially leading to liquidity challenges. Conversely, a shorter cycle implies faster cash conversion and better liquidity.
It is essential for LCI Industries to effectively manage its inventory levels, optimize sales collection processes, and negotiate favorable payment terms with suppliers to reduce its cash conversion cycle duration. By efficiently managing these components, the company can improve its cash flow efficiency, enhance liquidity, and strengthen its overall financial performance.
Peer comparison
Dec 31, 2024