LyondellBasell Industries NV (LYB)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 47.57 | 48.52 | 39.99 | 47.83 | 65.09 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 47.57 | 48.52 | 39.99 | 47.83 | 65.09 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 47.57 + — – —
= 47.57
The cash conversion cycle measures how efficiently a company manages its working capital by evaluating the time it takes to convert its investments in inventory and accounts receivable into cash from sales. For LyondellBasell Industries NV, the trend in the cash conversion cycle over the past five years has improved steadily.
In 2020, the company's cash conversion cycle was 65.09 days, indicating that it took the company over two months to convert its investments in inventory and accounts receivable into cash from sales. However, by December 31, 2024, the cash conversion cycle had decreased to 47.57 days. This reduction in days suggests that the company has been able to operate more efficiently over time, converting its working capital into cash at a faster rate.
The improvement in the cash conversion cycle can be attributed to effective inventory management, faster collection of accounts receivable, or a more streamlined sales process. A shorter cash conversion cycle generally indicates better liquidity and operational efficiency for the company, as it reflects the ability to generate cash quickly from its core operations.
Overall, the decreasing trend in LyondellBasell Industries NV's cash conversion cycle from 2020 to 2024 is a positive indicator of the company's ability to efficiently manage its working capital and convert investments into cash in a timelier manner.
Peer comparison
Dec 31, 2024