Reliance Steel & Aluminum Co (RS)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 76.04 | 71.00 | 61.86 | 78.49 | 85.88 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 76.04 | 71.00 | 61.86 | 78.49 | 85.88 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 76.04 + — – —
= 76.04
The cash conversion cycle of Reliance Steel & Aluminum Co has shown some fluctuation over the past five years. In December 31, 2020, the company's cash conversion cycle stood at 85.88 days, indicating that it takes approximately 85.88 days for the company to convert its investments in inventory and other resources into cash flows from sales.
Over the following years, there was a gradual improvement in the cash conversion cycle. By December 31, 2022, the company's cash conversion cycle had decreased to 61.86 days, reflecting a more efficient management of inventory and receivables, resulting in a quicker conversion of assets into cash.
However, in December 31, 2023 and December 31, 2024, there was a slight increase in the cash conversion cycle to 71.00 days and 76.04 days, respectively. This uptick could suggest potential challenges in managing inventory levels or collecting receivables efficiently during those periods.
Overall, the trend in the cash conversion cycle of Reliance Steel & Aluminum Co over the past five years demonstrates efforts to optimize working capital management, but there were some fluctuations which may warrant further investigation to identify areas for improvement.