Owens Corning Inc (OC)
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 | 60.59 | 65.90 | 60.92 | 47.81 | 67.92 |
| Days of sales outstanding (DSO) | days | 37.53 | 36.47 | 40.98 | 48.41 | 39.25 |
| Number of days of payables | days | 61.50 | 66.44 | 61.88 | 48.92 | 53.59 |
| Cash conversion cycle | days | 36.62 | 35.93 | 40.02 | 47.29 | 53.59 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 60.59 + 37.53 – 61.50
= 36.62
The cash conversion cycle of Owens Corning has shown a consistent downward trend over the past five years, indicating improved efficiency in managing cash flows and working capital. In 2023, the company's cash conversion cycle decreased to 36.29 days, compared to 35.37 days in 2022 and 39.34 days in 2021. This suggests that Owens Corning has been able to convert its inventory into cash more rapidly, collect receivables more efficiently, and manage payables effectively.
Overall, the downward trend in the cash conversion cycle reflects the company's ability to optimize its operating cycle and generate cash more quickly from its everyday operations. This improvement may indicate better inventory management, tighter credit policies with customers, and extended payment terms with suppliers, all of which contribute to a more efficient cash conversion cycle for Owens Corning.