Owens Corning Inc (OC)
Cash conversion cycle
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 80.23 | 83.26 | 85.71 | 88.27 | 88.11 | 72.76 | 71.37 | 67.89 | 66.57 | 61.27 | 59.26 | 60.83 | 63.07 | 60.87 | 65.39 | 70.43 | 67.92 | 67.74 | 70.17 | 74.53 |
| Days of sales outstanding (DSO) | days | 37.53 | 49.87 | 53.92 | 52.76 | 36.47 | 50.24 | 54.13 | 57.89 | 40.98 | 51.00 | 56.95 | 58.81 | 48.41 | 54.36 | 52.92 | 47.90 | 39.25 | 49.58 | 50.50 | 53.97 |
| Number of days of payables | days | 81.44 | 78.46 | 79.92 | 81.88 | 88.84 | 72.65 | 75.53 | 78.60 | 67.62 | — | — | — | 64.55 | — | — | — | 53.59 | — | — | — |
| Cash conversion cycle | days | 36.32 | 54.67 | 59.71 | 59.15 | 35.74 | 50.35 | 49.98 | 47.18 | 39.93 | 112.27 | 116.22 | 119.64 | 46.93 | 115.23 | 118.31 | 118.33 | 53.59 | 117.33 | 120.67 | 128.51 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 80.23 + 37.53 – 81.44
= 36.32
The cash conversion cycle for Owens Corning has fluctuated over the past eight quarters, indicating varying efficiency in managing its cash flow and working capital. Generally, a longer cash conversion cycle suggests that the company takes longer to convert its investments in inventory into cash from sales.
In Q2 and Q3 of 2023, the cash conversion cycle increased significantly to 57.60 days and 52.82 days respectively, reflecting potential challenges in managing inventory, receivables, and payables during these periods. This increase may indicate inefficiencies in the company's operating cycle, possibly leading to a strain on liquidity and working capital management.
Conversely, in Q1 and Q4 of 2023, the cash conversion cycle decreased to 56.93 days and 36.29 days respectively, which could signify improved efficiency in converting investments into cash. This trend aligns with a more optimal management of inventory, receivables, and payables, resulting in a quicker conversion of resources into cash.
Comparing the data to the same quarters in 2022, there is a general upward trend in the cash conversion cycle, indicating a potential deterioration in the company's cash flow management over the past year. Owens Corning may need to focus on streamlining its working capital processes to reduce the cycle duration and improve overall financial performance in the future.