Lennox International Inc (LII)
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 | 72.07 | 72.29 | 83.15 | 88.43 | 74.30 | 79.29 | 91.47 | 96.17 | 80.04 | 81.33 | 79.26 | 80.54 | 62.04 | 57.37 | 54.60 | 67.65 | 61.83 | 57.54 | 70.27 | 82.80 |
| Days of sales outstanding (DSO) | days | 45.18 | 57.86 | 62.44 | 45.15 | 43.56 | 51.54 | 64.16 | 49.33 | 47.07 | 56.34 | 64.86 | 51.46 | 44.23 | 51.15 | 61.08 | 49.66 | 45.03 | 54.95 | 63.59 | 48.07 |
| Number of days of payables | days | 50.11 | 50.09 | 48.28 | 47.02 | 39.82 | 36.66 | 50.23 | 47.34 | 45.42 | 47.10 | 55.56 | 54.25 | 48.83 | 49.97 | 50.96 | 50.22 | 47.88 | 50.82 | 41.49 | 48.05 |
| Cash conversion cycle | days | 67.14 | 80.06 | 97.30 | 86.57 | 78.04 | 94.17 | 105.39 | 98.16 | 81.69 | 90.57 | 88.56 | 77.75 | 57.45 | 58.54 | 64.71 | 67.09 | 58.97 | 61.66 | 92.37 | 82.83 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 72.07 + 45.18 – 50.11
= 67.14
The cash conversion cycle (CCC) reflects Lennox International Inc's efficiency in managing its working capital. A lower CCC indicates that the company is able to convert its inventory and receivables into cash more quickly, which is generally favorable.
From March 31, 2020, to December 31, 2024, Lennox International Inc's cash conversion cycle fluctuated, with the cycle peaking at 105.39 days on June 30, 2023, and reaching its lowest point of 57.45 days on December 31, 2021. Overall, the company's CCC ranged between approximately 58.54 days and 105.39 days during this period.
Analyzing the trend, we observe that there was a general improvement in Lennox International Inc's cash conversion cycle from mid-2021 to the end of 2021, indicating enhanced efficiency in managing its cash flow. However, from the first quarter of 2022 through the third quarter of 2024, the CCC increased, showing that the company took longer to convert its investments in inventory and accounts receivable into cash.
Managers and investors should closely monitor the cash conversion cycle as it can impact the company's liquidity and overall financial health. A careful analysis of the components of the CCC, including the days inventory outstanding, days sales outstanding, and days payables outstanding, can provide insights into areas for improvement in working capital management.
Peer comparison
Dec 31, 2024