Regal Beloit Corporation (RRX)
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 | 95.16 | 121.96 | 150.34 | 112.27 | 99.84 |
| Days of sales outstanding (DSO) | days | 58.69 | 56.76 | 76.75 | 55.05 | 52.13 |
| Number of days of payables | days | 41.03 | 45.40 | 81.17 | 58.56 | 49.60 |
| Cash conversion cycle | days | 112.82 | 133.31 | 145.92 | 108.75 | 102.38 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 95.16 + 58.69 – 41.03
= 112.82
The cash conversion cycle of Regal Rexnord Corp has shown some fluctuation over the past five years.
On December 31, 2019, the company's cash conversion cycle was at its lowest at 104.43 days, indicating that it took approximately 104.43 days for Regal Rexnord Corp to convert its investments in raw materials and inventory into cash from sales.
Over the next two years, the cash conversion cycle increased steadily to 137.27 days on January 1, 2022, and further increased to 142.11 days on December 31, 2022. This suggests that Regal Rexnord Corp was taking longer to convert its investments into cash during these periods, possibly due to slower inventory turnover or longer accounts receivable payment periods.
However, there was an improvement in the cash conversion cycle on December 31, 2023, as it decreased to 117.05 days. This reduction could indicate that Regal Rexnord Corp has become more efficient in managing its working capital, leading to a shorter cycle and quicker conversion of investments into cash.
Overall, analyzing the cash conversion cycle of Regal Rexnord Corp provides insights into the company's efficiency in managing its cash flow, inventory, and accounts receivable, highlighting trends and potential improvements in its working capital management over the years.
Peer comparison
Dec 31, 2023