Owens Corning Inc (OC)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 65.45 | 60.59 | 65.90 | 60.92 | 47.81 |
| Days of sales outstanding (DSO) | days | 41.71 | 37.53 | 36.47 | 40.98 | 48.41 |
| Number of days of payables | days | 58.97 | 61.50 | 66.44 | 61.88 | 48.92 |
| Cash conversion cycle | days | 48.18 | 36.62 | 35.93 | 40.02 | 47.29 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 65.45 + 41.71 – 58.97
= 48.18
The cash conversion cycle of Owens Corning Inc has shown a decreasing trend over the past five years, improving from 47.29 days as of December 31, 2020, to 40.02 days as of December 31, 2021, and further to 35.93 days as of December 31, 2022. Although there was a slight increase to 36.62 days by December 31, 2023, the cycle remained relatively stable before increasing to 48.18 days by December 31, 2024.
The declining trend in the cash conversion cycle indicates that Owens Corning has been more efficient in managing its working capital, turning its inventory and receivables into cash more quickly over the years. However, the increase in the cycle by the end of 2024 suggests that there may have been challenges in maintaining this efficiency, possibly due to changes in the company's operations or market conditions.
Overall, a lower cash conversion cycle is generally favorable as it indicates better liquidity and efficient management of working capital. Companies strive to shorten their cash conversion cycles to free up cash for business operations and investments. Owens Corning should continue monitoring and managing its cash conversion cycle to sustain its financial health and operational efficiency.