Linde plc Ordinary Shares (LIN)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 31.54 | 26.20 | 24.86 | 26.69 | 24.22 |
| Days of sales outstanding (DSO) | days | 52.81 | 50.00 | 53.68 | 56.42 | 56.07 |
| Number of days of payables | days | 45.03 | 39.68 | 50.24 | 47.77 | 46.61 |
| Cash conversion cycle | days | 39.32 | 36.52 | 28.29 | 35.33 | 33.68 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 31.54 + 52.81 – 45.03
= 39.32
The cash conversion cycle of Linde Plc. has fluctuated over the past five years, as shown in the table. In 2023, the cash conversion cycle increased to 35.51 days, up from 33.25 days in 2022. This suggests that the company took longer to convert its investments in inventory and accounts receivable into cash during 2023.
Compared to 2021 when the cash conversion cycle was 18.82 days, the cycle has increased significantly, indicating a potential slowdown in Linde's cash conversion efficiency. However, the cash conversion cycle was higher in 2020 at 26.91 days before declining in 2021, indicating some level of variability in the company's cash conversion efficiency over these years.
When compared to 2019, when the cash conversion cycle was 25.03 days, the observed trend suggests a gradual increase in the time taken by Linde Plc. to convert its investments in inventory and accounts receivable into cash over the past five years.
Overall, it is important for investors and stakeholders to monitor Linde Plc.'s cash conversion cycle closely as it provides insights into the company's liquidity management and efficiency in converting its operating activities into cash.
Peer comparison
Dec 31, 2023