Mueller Water Products (MWA)
Cash conversion cycle
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 128.69 | 121.33 | 115.19 | 89.59 | 93.27 |
| Days of sales outstanding (DSO) | days | 59.83 | 63.46 | 68.09 | 73.56 | 68.45 |
| Number of days of payables | days | 46.88 | 41.91 | 50.76 | 44.62 | 38.63 |
| Cash conversion cycle | days | 141.64 | 142.88 | 132.53 | 118.52 | 123.09 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 128.69 + 59.83 – 46.88
= 141.64
The data on Mueller Water Products' cash conversion cycle (CCC) from September 30, 2020, through September 30, 2024, indicates notable fluctuations over the observed period. Specifically, the CCC was 123.09 days as of September 30, 2020, which decreased to 118.52 days by September 30, 2021, reflecting an improvement in the company's ability to convert its investments in inventory and receivables into cash. However, this downward trend was reversed in subsequent years, with the CCC increasing to 132.53 days by September 30, 2022, suggesting a lengthening of the cycle, potentially due to slower receivables collection, longer inventory turnover, or both.
The upward trend continued into 2023, reaching 142.88 days, marking the highest level within the analyzed timeframe. This represents a significant extension of the cash conversion cycle and could indicate potential challenges in cash flow management, possibly arising from extended receivables, increased inventory holding periods, or delays within the supply chain.
By September 30, 2024, there was a slight decline to 141.64 days, yet the cycle remained substantially longer than the levels observed in 2020 and 2021. This sustained elongation in the CCC suggests persistent operational or credit management issues, or shifts in working capital efficiency, that are impacting the company's capacity to convert its investments into cash swiftly.
Overall, the trend reflects a trend toward increased working capital requirements and a lengthening of the cash conversion cycle over the four-year span, which may warrant further investigation into receivables and inventory management practices to understand the underlying causes and potential implications for liquidity and operational efficiency.
Peer comparison
Sep 30, 2024