Lincoln Electric Holdings Inc (LECO)
Cash conversion cycle
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 62.09 | 73.25 | 87.48 | 94.43 | 97.92 | 95.02 | 99.66 | 96.95 | 91.00 | 92.99 | 88.34 | 83.29 | 78.00 | 79.68 | 82.21 | 74.18 | 72.01 | 75.26 | 73.07 | 68.58 |
| Days of sales outstanding (DSO) | days | 46.95 | 48.59 | 52.65 | 54.02 | 52.55 | 46.00 | 53.36 | 55.38 | 48.42 | 52.44 | 56.67 | 58.09 | 51.34 | 50.47 | 44.85 | 47.78 | 45.53 | 47.93 | 51.82 | 50.98 |
| Number of days of payables | days | 35.90 | 39.29 | 46.44 | 51.33 | 51.81 | 49.57 | 56.81 | 59.72 | 55.66 | 54.83 | 58.76 | 58.89 | 52.48 | 45.55 | 44.65 | 46.26 | 49.93 | 44.64 | 46.81 | 46.15 |
| Cash conversion cycle | days | 73.14 | 82.55 | 93.70 | 97.12 | 98.66 | 91.45 | 96.21 | 92.61 | 83.77 | 90.60 | 86.25 | 82.49 | 76.86 | 84.60 | 82.40 | 75.71 | 67.62 | 78.55 | 78.08 | 73.41 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 62.09 + 46.95 – 35.90
= 73.14
The cash conversion cycle for Lincoln Electric Holdings, Inc. has shown some fluctuations over the past eight quarters. The company's ability to convert its investments in inventory and accounts receivable into cash can be observed through this metric.
In Q4 2023, the cash conversion cycle was 78.71 days, showing an improvement from the previous quarter at 87.22 days. This indicates that the company was able to more efficiently manage its inventory and receivables to convert them into cash.
The trend over the past quarters has been somewhat volatile, with fluctuations in the cash conversion cycle. In Q1 2023, the cycle was at its highest point at 97.12 days, suggesting that the company may have faced challenges in managing its working capital efficiently during that period.
Comparing Q4 2023 to Q4 2022, there has been a decrease in the cash conversion cycle from 98.66 days to 78.71 days, which is a positive sign of improving liquidity and operational efficiency.
Overall, Lincoln Electric Holdings, Inc. should continue monitoring and managing its inventory and accounts receivable effectively to sustain lower cash conversion cycle durations, which would ultimately contribute to improved cash flows and financial performance.
Peer comparison
Dec 31, 2023