Reliance Steel & Aluminum Co (RS)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 75.04 | 80.54 | 82.48 | 77.83 | 72.25 | 73.89 | 73.84 | 63.36 | 61.86 | 65.97 | 73.59 | 67.83 | 78.49 | 82.70 | 85.02 | 87.96 | 85.88 | 82.97 | 81.05 | 80.98 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 75.04 | 80.54 | 82.48 | 77.83 | 72.25 | 73.89 | 73.84 | 63.36 | 61.86 | 65.97 | 73.59 | 67.83 | 78.49 | 82.70 | 85.02 | 87.96 | 85.88 | 82.97 | 81.05 | 80.98 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 75.04 + — – —
= 75.04
The cash conversion cycle (CCC) measures how long it takes a company to convert its investment in inventory and other resources into cash inflows from sales. For Reliance Steel & Aluminum Co, the CCC fluctuated over the period from March 31, 2020, to December 31, 2024.
The CCC started at around 81 days in the first quarter of 2020 and increased gradually to reach a peak of 87.96 days by March 31, 2021. This prolonged cycle could indicate that the company was taking longer to convert its investments into cash during this time.
However, from March 31, 2021, to December 31, 2024, there was a general trend of improvement in the CCC. The company managed to reduce its cash conversion cycle from 87.96 days to 75.04 days by the end of December 31, 2024. This reduction suggests that Reliance Steel & Aluminum Co became more efficient in managing its working capital during this period.
It is worth noting that a decreasing CCC is generally a positive sign as it indicates that the company is managing its working capital more effectively and potentially generating cash from operations more efficiently. By focusing on optimizing their inventory levels, accounts receivable collection, and accounts payable management, Reliance Steel & Aluminum Co was able to shorten its CCC over the course of the analyzed period. This could result in improved liquidity and profitability for the company.