NewMarket Corporation (NEU)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	80.01	101.36	92.87	93.55	77.86
Days of sales outstanding (DSO)	days	59.39	60.93	61.75	61.45	56.83
Number of days of payables	days	40.53	43.87	45.84	44.31	38.04
Cash conversion cycle	days	98.86	118.41	108.77	110.69	96.65

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 80.01 + 59.39 – 40.53
= 98.86

The cash conversion cycle for NewMarket Corp. has shown some fluctuations over the past five years.

In 2023, the cash conversion cycle improved to 101.14 days compared to the previous year, indicating that the company was able to convert its investments in inventory and accounts receivable into cash more effectively. This may be a positive sign of efficient working capital management.

In 2022, there was an increase in the cash conversion cycle to 121.42 days, signaling a potential delay in converting inventory and receivables into cash. This could have been caused by various factors such as slower sales or difficulties in collecting accounts receivable.

Similarly, in 2021, the cash conversion cycle was 111.64 days, showing a slight improvement from 2020 when it was 115.48 days. The company may have made some operational changes to streamline its working capital processes during this period.

In 2019, the cash conversion cycle was at its lowest point, at 99.74 days, which suggests that the company was managing its working capital efficiently, converting investments into cash quickly.

Overall, analyzing the cash conversion cycle can provide insights into how effectively NewMarket Corp. is managing its working capital and converting its assets into cash. It is essential for the company to continue monitoring and improving this cycle to ensure optimal financial performance.