Otis Worldwide Corp (OTIS)
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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 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 | 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 | 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 | -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, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 110.42 + 97.44 – 338.84
= -130.98
To analyze Otis Worldwide Corp's cash conversion cycle, we look at the trend over eight quarters:
- In Q4 2023, the cash conversion cycle was 44.75 days, showing an improvement from the previous quarter when it was 52.05 days.
- Q3 2023 saw a decrease in the cash conversion cycle compared to Q2 2023, which was the highest in recent quarters at 51.21 days.
- The cycle continued to increase in Q1 2023 to 57.34 days, indicating a lengthening in the time taken to convert inputs into cash.
- Comparing with the same quarter in the previous year, Q4 2022, the cash conversion cycle improved slightly from 48.42 days to 44.75 days.
- Overall, there have been fluctuations in the cash conversion cycle over the quarters, but the trend shows some fluctuation within a range rather than a clear upward or downward trajectory.
The cash conversion cycle measures the time it takes for a company to convert its inputs, such as raw materials, into cash received from sales. A shorter cycle is generally preferable as it indicates efficient management of working capital. Otis Worldwide Corp should aim to analyze the reasons behind the fluctuations and trends seen in their cash conversion cycle to identify opportunities for improvement in operational efficiency and working capital management.
Peer comparison
Dec 31, 2023