Otis Worldwide Corp (OTIS)
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 | 101.96 | 110.42 | 118.65 | 108.01 | 110.90 |
| Days of sales outstanding (DSO) | days | 93.19 | 97.44 | 95.71 | 88.38 | 100.25 |
| Number of days of payables | days | 343.95 | 338.84 | 330.19 | 270.19 | 244.51 |
| Cash conversion cycle | days | -148.80 | -130.98 | -115.83 | -73.81 | -33.37 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 101.96 + 93.19 – 343.95
= -148.80
The cash conversion cycle of Otis Worldwide Corp has shown a consistent improvement over the years based on the provided data. As of December 31, 2020, the company had a negative cash conversion cycle of -33.37 days, indicating that it was efficient in converting its investments in inventory and accounts receivable into cash.
Subsequently, the cash conversion cycle further decreased to -73.81 days by December 31, 2021, and continued to improve significantly to reach -115.83 days by the end of December 31, 2022. This trend suggests that Otis Worldwide Corp was able to manage its working capital effectively, resulting in a shorter time taken to convert its resources into cash.
By December 31, 2023, the cash conversion cycle decreased even further to -130.98 days, highlighting the company's continued operational efficiency. As of December 31, 2024, the cash conversion cycle reached its lowest point at -148.80 days, indicating that Otis Worldwide Corp was efficient in managing its cash flows, inventory, and receivables.
Overall, the consistently negative cash conversion cycle values reflect Otis Worldwide Corp's ability to optimize its working capital management, enhance cash flows, and efficiently convert its resources into cash, ultimately contributing to its financial performance and stability.
Peer comparison
Dec 31, 2024