Otis Worldwide Corp (OTIS)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 102.01 | 114.06 | 109.86 | 105.94 | 110.42 | 116.50 | 122.50 | 124.45 | 118.65 | 111.95 | 106.85 | 110.28 | 108.01 | 105.78 | 112.68 | 116.68 | 65.13 |
| Days of sales outstanding (DSO) | days | 93.48 | 99.54 | 99.99 | 100.99 | 97.44 | 96.70 | 98.97 | 97.17 | 95.71 | 88.12 | 89.01 | 89.68 | 88.38 | 91.39 | 93.56 | 96.62 | 99.92 |
| Number of days of payables | days | 344.12 | 324.67 | 311.61 | 293.18 | 338.84 | 308.99 | 333.80 | 293.67 | 330.19 | 282.38 | 289.71 | 265.47 | 270.19 | 279.94 | 262.70 | 248.15 | 143.61 |
| Cash conversion cycle | days | -148.64 | -111.06 | -101.75 | -86.25 | -130.98 | -95.79 | -112.33 | -72.05 | -115.83 | -82.31 | -93.85 | -65.51 | -73.81 | -82.77 | -56.46 | -34.86 | 21.44 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 102.01 + 93.48 – 344.12
= -148.64
The cash conversion cycle is a key metric that provides insights into how efficiently a company manages its working capital. It measures the time it takes for a company to convert its investment in inventory into cash flows from sales.
For Otis Worldwide Corp, the trend in the cash conversion cycle over the specified periods shows a consistent improvement in efficiency. The company has been able to significantly reduce its cash conversion cycle days, moving from positive days (indicating longer cycle times where cash is tied up in operations) to negative days (indicating shorter cycle times and improved liquidity).
The decreasing trend in the cash conversion cycle days suggests that Otis Worldwide Corp has been able to streamline its operations, manage its inventory effectively, and collect receivables more efficiently. This can lead to improved cash flows and better working capital management, which are positive indicators for the company's financial health.
Overall, the declining cash conversion cycle days for Otis Worldwide Corp demonstrate a positive trend in its working capital management, potentially resulting in improved operational efficiency and cash flow generation.
Peer comparison
Dec 31, 2024