Sturm Ruger & Company Inc (RGR)
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 | 71.02 | 57.06 | 35.47 | 28.12 | 33.22 |
| Days of sales outstanding (DSO) | days | 40.18 | 40.09 | 28.49 | 37.13 | 46.80 |
| Number of days of payables | days | 9.88 | 11.66 | 9.88 | 12.37 | 9.79 |
| Cash conversion cycle | days | 101.33 | 85.49 | 54.09 | 52.88 | 70.24 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 71.02 + 40.18 – 9.88
= 101.33
The cash conversion cycle of Sturm, Ruger & Co., Inc. has varied over the past five years, indicating fluctuations in the efficiency of the company's working capital management.
In 2023, the cash conversion cycle increased to 101.33 days from 85.49 days in 2022. This suggests that the company took longer to convert its investments in inventory and accounts receivable into cash during the year, potentially facing challenges in managing its liquidity efficiently.
The significant increase in the cash conversion cycle in 2023 compared to the previous year could be attributed to delays in collecting receivables or higher inventory holding periods. This prolonged cycle implies a potential strain on the company's liquidity and working capital management.
Comparing the 2023 data to earlier years, it is evident that the cash conversion cycle was longer than in 2021 and 2020 but still lower compared to 2019. This indicates a mixed performance in working capital efficiency over the past five years, with improvements noted in earlier years followed by a lengthening cycle in 2023.
Overall, a longer cash conversion cycle can tie up resources and impact the company's ability to fund its operations effectively. Sturm, Ruger & Co., Inc. may need to review its inventory management and accounts receivable collection processes to shorten the cycle and enhance its cash flow position.
Peer comparison
Dec 31, 2023