Royal Gold Inc (RGLD)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 34.12 | 27.42 | 34.59 | 53.22 | 36.91 |
| Days of sales outstanding (DSO) | days | 0.58 | 1.61 | 1.86 | 2.54 | 1.78 |
| Number of days of payables | days | 27.82 | 32.05 | 18.27 | 19.25 | 7.85 |
| Cash conversion cycle | days | 6.88 | -3.02 | 18.17 | 36.51 | 30.83 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 34.12 + 0.58 – 27.82
= 6.88
The cash conversion cycle of Royal Gold Inc, a measure of efficiency in managing cash flows related to working capital, has shown fluctuations over the years based on the provided data. As of June 30, 2020, the company's cash conversion cycle stood at 30.83 days, indicating that it took approximately a month for the company to convert its investments in inventory and other resources into cash received from customers.
By June 30, 2021, the cash conversion cycle increased to 36.51 days, suggesting a slight deterioration in the company's ability to efficiently manage its working capital. However, the situation improved significantly by December 31, 2022, with a cash conversion cycle of 18.17 days, indicating a more efficient cash management process.
Surprisingly, as of December 31, 2023, the cash conversion cycle turned negative to -3.02 days. This unusual scenario could indicate that Royal Gold Inc was able to convert its investment in working capital into cash received from customers even before paying its suppliers, which could be a favorable sign of effective cash flow management.
By December 31, 2024, the cash conversion cycle increased slightly to 6.88 days, still reflecting a relatively efficient cash conversion process compared to the previous periods. Overall, the fluctuating trend in Royal Gold Inc's cash conversion cycle showcases the company's varying efficiency in managing its working capital and converting it into cash, with both positive and negative cycles observed during the period analyzed.