Rockwell Automation Inc (ROK)
Cash conversion cycle
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 64.36 | 67.08 | 58.80 | 49.82 | 40.49 |
| Days of sales outstanding (DSO) | days | 79.58 | 85.95 | 84.52 | 75.02 | 73.34 |
| Number of days of payables | days | 42.82 | 54.92 | 57.34 | 55.54 | 47.69 |
| Cash conversion cycle | days | 101.12 | 98.11 | 85.98 | 69.30 | 66.14 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 64.36 + 79.58 – 42.82
= 101.12
The cash conversion cycle of Rockwell Automation Inc has shown a fluctuating trend over the past five years. In September 2020, the company's cash conversion cycle was 66.14 days, which increased to 69.30 days in 2021. However, there was a significant jump in the cash conversion cycle in 2022, reaching 85.98 days, indicating a longer period for the company to convert its investments in inventory back into cash.
The trend continued in 2023 with a further increase to 98.11 days, and in the most recent year, 2024, the cash conversion cycle peaked at 101.12 days. This suggests that Rockwell Automation Inc is taking longer to convert its resources into cash and may have inefficiencies in managing its working capital, particularly in terms of inventory turnover and collection of accounts receivable.
It is crucial for the company to address this trend, as a longer cash conversion cycle can tie up valuable resources and potentially affect the company's liquidity and overall financial performance. Efforts to streamline operations, improve inventory management, and expedite the collection of receivables could help in reducing the cash conversion cycle and enhance the company's financial health.
Peer comparison
Sep 30, 2024