REX American Resources Corporation (REX)

Cash conversion cycle

		Jan 31, 2024	Jan 31, 2023	Jan 31, 2022	Jan 31, 2021	Jan 31, 2020
Days of inventory on hand (DOH)	days	13.40	22.23	22.76	38.68	32.74
Days of sales outstanding (DSO)	days	12.66	12.01	15.31	25.20	16.60
Number of days of payables	days	20.89	15.55	17.39	17.48	17.36
Cash conversion cycle	days	5.17	18.69	20.68	46.41	31.97

January 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 13.40 + 12.66 – 20.89
= 5.17

The cash conversion cycle of REX American Resources Corporation has shown variability over the past five years. In Jan 2024, the company's cash conversion cycle decreased significantly to 5.17 days from 18.69 days in the previous year, indicating an improvement in its efficiency in converting its inventory and accounts receivable into cash.

This positive trend is a notable improvement compared to the prior years, as the cash conversion cycle was 20.68 days in Jan 2022, 46.41 days in Jan 2021, and 31.97 days in Jan 2020. The decreasing trend suggests that the company has been able to manage its inventory, collect receivables, and pay its payables more efficiently in recent years.

A shorter cash conversion cycle is generally preferred as it indicates that the company is able to generate cash quickly from its operational activities. This improvement can lead to enhanced liquidity, better working capital management, and increased financial stability for REX American Resources Corporation.