Powell Industries Inc (POWL)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 36.97 | 35.50 | 23.52 | 21.44 | 21.30 |
| Days of sales outstanding (DSO) | days | 53.92 | 36.37 | 30.42 | 24.78 | 39.65 |
| Number of days of payables | days | 32.80 | 44.66 | 35.68 | 25.93 | 37.33 |
| Cash conversion cycle | days | 58.09 | 27.21 | 18.26 | 20.29 | 23.61 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 36.97 + 53.92 – 32.80
= 58.09
The cash conversion cycle for Powell Industries, Inc. has displayed fluctuating trends over the past five years. The cycle increased notably in 2023 to 112.64 days from 62.19 days in 2022, indicating a prolonged period for the company to convert its resource inputs into cash inflows. This increase may raise concerns about the efficiency of the company's working capital management and its ability to convert inventory and receivables into cash.
Comparing 2023 to 2021, there was a substantial increase in the cash conversion cycle, reflecting potential issues with inventory management and/or collection of receivables. The cash conversion cycle also increased from 2020 to 2021, suggesting a longer time to convert resources into cash. However, it decreased from 2019 to 2020 before rising again in 2021.
The variability in the cash conversion cycle over the years could be influenced by changes in the company's operating cycle, inventory management, and credit terms with customers. It is important for Powell Industries to closely monitor and manage its cash conversion cycle to ensure efficient use of its working capital and to optimize its cash flow position.
Peer comparison
Sep 30, 2023