Quanex Building Products (NX)
Cash conversion cycle
| 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 | Jul 31, 2019 | Apr 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 40.22 | 35.83 | 43.82 | 45.83 | 49.01 | 46.30 | 53.69 | 52.40 | 49.42 | 40.62 | 42.98 | 39.83 | 40.97 | 33.90 | 35.75 | 40.80 | 41.13 | 35.30 | 44.26 | 44.92 |
| Days of sales outstanding (DSO) | days | 26.35 | 63.00 | 30.90 | 29.52 | 25.45 | 57.33 | 33.14 | 37.14 | 32.70 | 73.55 | 34.63 | 36.39 | 34.04 | 75.68 | 36.86 | 28.29 | 26.16 | 67.66 | 33.47 | 32.75 |
| Number of days of payables | days | 20.62 | 27.20 | 29.72 | 25.92 | 24.21 | 29.84 | 32.83 | 35.75 | 31.77 | 38.08 | 36.40 | 41.18 | 33.69 | 42.85 | 32.81 | 22.95 | 25.85 | 33.43 | 27.46 | 25.29 |
| Cash conversion cycle | days | 45.95 | 71.63 | 45.00 | 49.43 | 50.25 | 73.80 | 54.00 | 53.79 | 50.35 | 76.08 | 41.22 | 35.05 | 41.32 | 66.73 | 39.80 | 46.14 | 41.44 | 69.53 | 50.26 | 52.38 |
January 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 40.22 + 26.35 – 20.62
= 45.95
The cash conversion cycle is a critical metric used to assess the efficiency of a company's working capital management. It measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally preferable as it indicates that the company is able to generate cash quickly from its operational activities.
Analyzing Quanex Building Products' cash conversion cycle over the past several quarters reveals fluctuations in the efficiency of its working capital management. For example, the cycle ranged from a low of 35.05 days in July 2021 to a high of 76.08 days in October 2021. This variability suggests that the company's ability to efficiently manage its working capital has not been consistent.
It is noteworthy that the cash conversion cycle has generally trended downwards in more recent quarters, which indicates improvements in the company's ability to efficiently convert its investments in inventory and other resources into cash. For instance, the cycle decreased from 71.63 days in October 2023 to 45.95 days in January 2024, reflecting a more efficient working capital management process.
Overall, Quanex Building Products should continue to monitor and strive to optimize its cash conversion cycle to ensure that it maintains a healthy balance between liquidity and operational efficiency. By focusing on reducing the cycle further, the company can potentially enhance its cash flow generation and overall financial performance.
Peer comparison
Jan 31, 2024