Polaris Industries Inc (PII)
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 | 83.03 | 92.45 | 76.14 | 64.75 | 66.78 |
| Days of sales outstanding (DSO) | days | 13.07 | 15.57 | 10.99 | 13.69 | 12.13 |
| Number of days of payables | days | 32.70 | 41.33 | 39.11 | 43.01 | 26.82 |
| Cash conversion cycle | days | 63.40 | 66.69 | 48.02 | 35.43 | 52.10 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 83.03 + 13.07 – 32.70
= 63.40
The cash conversion cycle of Polaris Inc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 70.32 days, a slight decrease from 73.17 days in 2022. This indicates that the company took less time to convert its investments in inventory and receivables into cash during the most recent year.
Comparing with the prior years, the cash conversion cycle was longer in 2022 compared to 2021, which suggests inefficiencies in managing cash flow and working capital. However, in 2021, there was a notable improvement from 2020 when the cash conversion cycle was 40.70 days, indicating that Polaris Inc was more efficient in converting its assets into cash during that year.
The cash conversion cycle in 2019 was slightly higher at 59.69 days compared to 2021 but lower than 2020 and 2022. Overall, fluctuations in the cash conversion cycle over the five-year period may indicate variability in inventory management, receivables collection, and payment of liabilities. Further analysis of the components of the cash conversion cycle could provide insights into the effectiveness of the company's working capital management.