Omnicom Group Inc (OMC)
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 | 43.95 | 38.35 | 37.52 | 36.25 | 33.91 |
| Days of sales outstanding (DSO) | days | 215.01 | 215.14 | 206.83 | 216.42 | 216.53 |
| Number of days of payables | days | 338.24 | 332.30 | 328.95 | 359.13 | 354.50 |
| Cash conversion cycle | days | -79.27 | -78.81 | -84.60 | -106.46 | -104.06 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 43.95 + 215.01 – 338.24
= -79.27
The cash conversion cycle, which represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has shown a consistent downward trend from -104.06 days as of December 31, 2020, to -79.27 days as of December 31, 2024.
This indicates that Omnicom Group Inc has been managing its working capital efficiently, reducing the time it takes to cycle through its cash conversion process. A negative cash conversion cycle suggests that the company is efficiently collecting payments from customers, managing inventory levels, and delaying payments to suppliers.
The decreasing trend in the cash conversion cycle over the years reflects operational improvements in working capital management, potentially leading to increased profitability and cash flow generation for the company. It also indicates effective strategies in managing its operating cycle, highlighting Omnicom's ability to optimize its liquidity and financial health.
Peer comparison
Dec 31, 2024