Royal Gold Inc (RGLD)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 27.42 | 34.59 | 53.22 | 36.91 | 38.45 |
| Days of sales outstanding (DSO) | days | 1.61 | 1.86 | 2.54 | 1.78 | 2.33 |
| Number of days of payables | days | 32.05 | 18.27 | 19.25 | 7.85 | 9.77 |
| Cash conversion cycle | days | -3.02 | 18.17 | 36.51 | 30.83 | 31.02 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 27.42 + 1.61 – 32.05
= -3.02
The cash conversion cycle of Royal Gold, Inc. has shown a decreasing trend over the past five periods, indicating improvements in its cash management efficiency.
As of December 31, 2023, the company's cash conversion cycle stands at 24.40 days, which is significantly lower compared to 54.77 days in 2022 and even more so when compared to 75.02 days in 2021. This decrease suggests that Royal Gold, Inc. has been able to optimize its working capital management, leading to a more streamlined process of converting raw materials into cash.
The downward trend in the cash conversion cycle is a positive sign for the company as it indicates that Royal Gold, Inc. is managing its inventory, accounts receivable, and accounts payable more effectively. This efficiency in cash management can lead to improved liquidity, reduced financing costs, and overall better financial performance for the company.
Overall, the decreasing trend in Royal Gold, Inc.'s cash conversion cycle demonstrates the company's ability to manage its working capital efficiently, which can bode well for its financial health and profitability in the long run.