MSC Industrial Direct Company Inc (MSM)
Cash conversion cycle
| Aug 31, 2024 | Jun 1, 2024 | Mar 2, 2024 | Dec 2, 2023 | Sep 2, 2023 | Jun 3, 2023 | Mar 4, 2023 | Dec 3, 2022 | Sep 3, 2022 | May 28, 2022 | Feb 26, 2022 | Nov 27, 2021 | Aug 28, 2021 | May 29, 2021 | Feb 27, 2021 | Nov 28, 2020 | Aug 29, 2020 | May 30, 2020 | Feb 29, 2020 | Nov 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 95.69 | 96.37 | 97.53 | 100.40 | 102.87 | 103.61 | 109.84 | 109.72 | 110.93 | 111.50 | 110.36 | 103.59 | 106.22 | 145.57 | 131.21 | 133.90 | 136.97 | 109.03 | 104.66 | 100.76 |
| Days of sales outstanding (DSO) | days | 39.50 | 39.60 | 39.67 | 38.07 | 40.00 | — | — | — | 68.13 | 69.86 | 66.68 | 63.91 | 63.36 | 65.48 | 61.76 | 57.61 | 56.44 | 60.68 | 59.17 | 58.45 |
| Number of days of payables | days | 30.60 | 29.77 | 29.61 | 26.75 | 32.04 | 29.91 | 30.50 | 32.14 | 33.70 | 32.73 | 32.12 | 29.59 | 31.71 | 47.65 | 42.01 | 36.87 | 31.72 | 24.07 | 29.21 | 26.66 |
| Cash conversion cycle | days | 104.58 | 106.20 | 107.59 | 111.73 | 110.82 | 73.70 | 79.34 | 77.58 | 145.36 | 148.63 | 144.92 | 137.91 | 137.87 | 163.40 | 150.96 | 154.64 | 161.69 | 145.64 | 134.61 | 132.55 |
August 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 95.69 + 39.50 – 30.60
= 104.58
The cash conversion cycle is an important metric that reflects how efficiently a company manages its working capital. It measures the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales.
Based on the data provided for MSC Industrial Direct Company Inc, the cash conversion cycle has been fluctuating over the periods analyzed. On average, the company takes around 120 days to convert its investments into cash inflows. A shorter cash conversion cycle is generally viewed as positive as it indicates that the company is able to efficiently manage its working capital and generate cash from its operations.
During certain periods, such as in March 2023 and June 2023, the company experienced relatively lower cash conversion cycles, which suggests better efficiency in managing inventory, accounts receivable, and accounts payable.
On the other hand, in September 2022 and December 2022, the cash conversion cycle increased significantly, indicating potential challenges in managing working capital efficiently during those periods. A longer cash conversion cycle can tie up funds in working capital and affect liquidity and profitability.
Overall, MSC Industrial Direct Company Inc should aim to consistently monitor and improve its cash conversion cycle to enhance operational efficiency and optimize its working capital management.
Peer comparison
Aug 31, 2024