Resideo Technologies Inc (REZI)
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 | 60.92 | 62.46 | 51.07 | 50.20 | 50.31 |
| Days of sales outstanding (DSO) | days | 57.49 | 57.98 | 55.26 | 31.25 | 30.07 |
| Number of days of payables | days | 58.59 | 57.27 | 60.94 | 69.92 | 68.98 |
| Cash conversion cycle | days | 59.83 | 63.17 | 45.39 | 11.53 | 11.40 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 60.92 + 57.49 – 58.59
= 59.83
The cash conversion cycle of Resideo Technologies Inc has exhibited fluctuations over the past five years. In 2023, the company's cash conversion cycle stood at 59.79 days, showing a slight improvement compared to the previous year's 63.84 days. However, it was notably higher than the levels seen in 2021, 2020, and 2019, which were 42.51 days, 36.48 days, and 35.85 days, respectively.
The upward trend in the cash conversion cycle from 2019 to 2023 may indicate challenges in managing the company's working capital efficiently. A longer cash conversion cycle implies that Resideo Technologies Inc is taking longer to convert its investments in inventory and accounts receivable into cash from sales, which could potentially tie up valuable resources and impact liquidity.
It is essential for the company to analyze the underlying factors contributing to the increase in the cash conversion cycle and implement strategies to optimize the cycle for better cash flow management and overall financial performance.