MSC Industrial Direct Company Inc (MSM)
Cash conversion cycle
| Aug 31, 2024 | Sep 2, 2023 | Sep 3, 2022 | Aug 28, 2021 | Aug 29, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 94.13 | 101.39 | 109.30 | 104.54 | 95.56 |
| Days of sales outstanding (DSO) | days | 39.38 | 39.87 | 68.14 | 63.36 | 56.53 |
| Number of days of payables | days | 30.11 | 31.58 | 33.20 | 31.21 | 22.13 |
| Cash conversion cycle | days | 103.40 | 109.68 | 144.24 | 136.69 | 129.96 |
August 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 94.13 + 39.38 – 30.11
= 103.40
The cash conversion cycle of MSC Industrial Direct Company Inc has shown fluctuations over the past five years. The company's cash conversion cycle decreased from 129.96 days in 2020 to 103.40 days in 2024, indicating an improvement in its efficiency in managing cash flows.
A lower cash conversion cycle suggests that the company is efficiently managing its working capital and converting inventory and accounts receivable into cash at a faster rate. This can be a positive indicator of effective inventory management and accounts receivable collection processes.
However, it is important to note that there was an increase in the cash conversion cycle from 2023 to 2024, indicating a potential slowdown in the company's cash conversion efficiency during that period. It would be important for the company to monitor this trend and identify any factors contributing to the increased cycle length.
Overall, the decreasing trend in the cash conversion cycle over the five-year period suggests an improvement in the company's cash flow management, but the recent increase should be closely monitored to ensure sustained efficiency in working capital management.
Peer comparison
Aug 31, 2024