MSC Industrial Direct Company Inc (MSM)
Cash conversion cycle
| 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 | Aug 31, 2019 | Jun 1, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 105.29 | 108.35 | 111.01 | 103.68 | 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 | 105.65 | 106.55 |
| Days of sales outstanding (DSO) | days | 39.45 | 37.86 | 39.77 | — | — | — | 68.13 | 69.86 | 66.68 | 63.91 | 63.36 | 65.48 | 61.76 | 57.61 | 56.44 | 60.68 | 59.17 | 58.45 | 58.71 | — |
| Number of days of payables | days | 31.97 | 28.86 | 34.58 | 29.94 | 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 | 30.25 | 27.90 |
| Cash conversion cycle | days | 112.77 | 117.34 | 116.20 | 73.75 | 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 | 134.11 | 78.66 |
March 2, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 105.29 + 39.45 – 31.97
= 112.77
The cash conversion cycle of MSC Industrial Direct Company Inc has shown fluctuations over the periods mentioned. The company's cash conversion cycle is a measure of how long it takes for the company to convert its investments in inventory and other resources into cash from sales to customers and then back into cash through the collection of accounts receivable.
From the data provided, it is evident that the company's cash conversion cycle fluctuated between the range of 73.75 days to 163.40 days over the past several quarters. A lower cash conversion cycle is generally preferable as it indicates that the company is able to efficiently convert its investments into cash.
During certain periods such as Jun 3, 2023, and Mar 4, 2023, the company exhibited relatively lower cash conversion cycles of 73.75 days and 79.34 days respectively, indicating efficiency in managing its working capital. Conversely, certain periods like Feb 27, 2021, and Nov 28, 2020, saw higher cash conversion cycles of 154.64 days and 161.69 days which may point to potential inefficiencies in managing inventory, accounts receivable, and accounts payable.
Overall, the company should aim to maintain a consistently low cash conversion cycle to ensure optimal efficiency in its operational and financial activities. Analyzing the factors contributing to fluctuations in the cash conversion cycle can help the company identify areas for improvement and implement strategies to optimize its working capital management.
Peer comparison
Mar 2, 2024