Dorian LPG Ltd (LPG)

Cash conversion cycle

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019
Days of inventory on hand (DOH)	days	6.85	5.46	6.92	8.60	9.62	9.59	8.62	7.90	8.17	7.95	5.99	6.83	6.75	7.70	7.94	7.88	7.75	8.59	8.30	7.53
Days of sales outstanding (DSO)	days	34.51	74.81	49.58	62.01	71.50	93.73	67.27	79.12	78.05	58.92	35.04	52.39	65.15	89.04	65.52	51.16	74.08	93.66	104.26	124.92
Number of days of payables	days	29.18	24.25	32.08	40.77	39.36	36.59	31.87	28.59	34.42	31.23	31.75	48.99	33.09	40.73	44.23	42.77	52.61	53.18	36.58	28.59
Cash conversion cycle	days	12.19	56.02	24.42	29.84	41.77	66.73	44.02	58.43	51.80	35.64	9.28	10.23	38.82	56.00	29.23	16.26	29.22	49.08	75.99	103.87

March 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 6.85 + 34.51 – 29.18
= 12.19

The cash conversion cycle of Dorian LPG Ltd has shown some fluctuations over the past several quarters. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In analyzing the trend, we can see that the cash conversion cycle has fluctuated significantly, ranging from as low as 9.28 days to as high as 103.87 days. This indicates potential challenges in managing working capital efficiently.

A lower cash conversion cycle is generally seen as positive, as it implies that the company is able to quickly convert its investments into cash. Conversely, a higher cash conversion cycle suggests that the company may be facing delays in converting investments into cash, which could impact liquidity and operational efficiency.

It is important for Dorian LPG Ltd to closely monitor and manage its cash conversion cycle to ensure optimal working capital management. By improving inventory turnover, collecting receivables more efficiently, and managing payables effectively, the company can work towards reducing its cash conversion cycle and enhancing overall financial performance.