Vail Resorts Inc (MTN)
Cash conversion cycle
| Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | Apr 30, 2020 | Jan 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 102.24 | 94.30 | 117.76 | 138.87 | 117.31 | 95.34 | 113.33 | 131.19 | 102.76 | 94.20 | 106.84 | 105.77 | 81.66 | 80.37 | 85.33 | 96.10 | 95.72 | 86.25 | 108.85 | 128.58 |
| Days of sales outstanding (DSO) | days | 47.54 | 43.32 | 17.74 | 13.43 | 48.14 | 44.46 | 20.72 | 16.45 | 55.41 | 39.58 | 28.04 | 20.36 | 66.02 | 42.61 | 26.90 | 41.65 | 19.83 | 17.17 | 16.06 | 13.74 |
| Number of days of payables | days | 121.36 | 90.48 | 114.23 | 142.28 | 131.45 | 105.05 | 166.36 | 152.23 | 142.97 | 105.89 | 140.88 | 118.83 | 99.90 | 70.87 | 84.72 | 71.07 | 56.09 | 52.64 | 121.21 | 142.51 |
| Cash conversion cycle | days | 28.41 | 47.13 | 21.27 | 10.02 | 34.00 | 34.74 | -32.31 | -4.59 | 15.20 | 27.89 | -6.01 | 7.30 | 47.77 | 52.11 | 27.51 | 66.67 | 59.45 | 50.78 | 3.70 | -0.19 |
July 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 102.24 + 47.54 – 121.36
= 28.41
The cash conversion cycle of Vail Resorts Inc has varied significantly over the past few years. The cycle measures the time it takes for a company to convert its investment in inventory and other resources into cash flow from sales. A shorter cash conversion cycle is generally better as it indicates faster turnover of resources into cash.
Analyzing the historical data, we observe that Vail Resorts Inc experienced a negative cash conversion cycle in some periods, indicating that the company was able to generate cash before paying suppliers or creditors. This can be advantageous for liquidity and working capital management. However, it's essential to investigate the reasons behind these negative cycles to ensure they are sustainable and not due to financial anomalies.
The cycle has fluctuated over the periods, with some quarters showing longer cycles, reaching up to 66.67 days in October 2020. The longer cycles may imply inefficiencies in managing inventory, collecting receivables, or paying suppliers. It is crucial for the company to assess and address the factors contributing to these extended cycles to optimize working capital efficiency and maintain healthy cash flows.
In contrast, the shortest cycle was 21.27 days in January 2024, indicating improved efficiency in managing cash conversion. This could be a result of better inventory management, quicker collection of receivables, or extended payment terms with suppliers. It is essential for Vail Resorts Inc to identify and replicate the strategies that led to shorter cycles to enhance overall financial performance.
Overall, analyzing the cash conversion cycle provides insights into Vail Resorts Inc's operational and financial efficiency in managing working capital. By continuously monitoring and optimizing this metric, the company can strengthen its financial position, support growth initiatives, and create value for its stakeholders.
Peer comparison
Jul 31, 2024