Callaway Golf Company (MODG)
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 | 107.58 | 260.19 | 334.81 | 220.65 | 74.04 |
| Days of sales outstanding (DSO) | days | 16.03 | 18.44 | 17.36 | 14.94 | 32.74 |
| Number of days of payables | days | 13.69 | 42.81 | 55.53 | 57.37 | 13.92 |
| Cash conversion cycle | days | 109.92 | 235.82 | 296.63 | 178.23 | 92.85 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 107.58 + 16.03 – 13.69
= 109.92
The cash conversion cycle of Callaway Golf Company has shown fluctuations over the past five years. In December 2020, the cash conversion cycle was 92.85 days, indicating that it took the company approximately 92.85 days to convert its investments in inventory and other resources back into cash.
However, by December 2021, the cash conversion cycle had increased to 178.23 days, suggesting a slowdown in the company's ability to efficiently manage its working capital. This trend continued in 2022 as the cash conversion cycle extended to 296.63 days, reaching a peak and indicating potential liquidity challenges or inefficiencies in the company's operations.
In December 2023, there was a slight improvement as the cash conversion cycle decreased to 235.82 days. This reduction may have been a result of better inventory management or collection of receivables.
By December 2024, the cash conversion cycle significantly improved to 109.92 days, signaling a positive turnaround in the company's working capital management. It suggests that Callaway Golf Company was able to streamline its processes and convert its resources into cash more efficiently compared to the previous year.
Overall, the fluctuation in the cash conversion cycle reflects changes in the company's operational efficiency, inventory management, and ability to collect cash from customers. It is essential for Callaway Golf Company to consistently monitor and improve its cash conversion cycle to ensure optimal utilization of its working capital.
Peer comparison
Dec 31, 2024