Otter Tail Corporation (OTTR)
Cash conversion cycle
Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
---|---|---|---|---|---|---|
Days of inventory on hand (DOH) | days | 105.39 | 97.93 | 110.07 | 6,528.28 | 6,034.06 |
Days of sales outstanding (DSO) | days | 43.06 | 36.27 | 53.88 | 48.43 | 44.21 |
Number of days of payables | days | 66.48 | 70.05 | 100.13 | 8,543.68 | 7,447.69 |
Cash conversion cycle | days | 81.97 | 64.16 | 63.81 | -1,966.97 | -1,369.42 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 105.39 + 43.06 – 66.48
= 81.97
The cash conversion cycle for Otter Tail Corporation has shown variability over the past five years. In 2023, the company's cash conversion cycle was 76.55 days, indicating that it took, on average, 76.55 days to convert its investments in inventory and other resources into cash inflows from sales. This represents an increase from the previous year's cycle of 57.50 days.
Comparing to 2021, where the cash conversion cycle was 61.33 days, the cycle has increased significantly in 2023. Additionally, in 2020 and 2019, the cash conversion cycle was notably lower at 14.48 days and 26.11 days, respectively.
The increasing trend in the cash conversion cycle may suggest potential inefficiencies in the company's working capital management, leading to delays in converting invested resources into cash. Otter Tail Corporation may need to review its inventory management, accounts receivable collection, and accounts payable strategies to optimize its cash conversion cycle and improve overall liquidity and efficiency.
Peer comparison
Dec 31, 2023