Stepan Company (SCL)
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 | 55.23 | 47.32 | 62.62 | 57.19 | 53.73 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 55.23 | 47.32 | 62.62 | 57.19 | 53.73 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 55.23 + — – —
= 55.23
The cash conversion cycle of Stepan Company has shown fluctuations over the past five years. In December 2020, the cash conversion cycle stood at 53.73 days, indicating the number of days it takes for the company to convert resources into cash flows. By December 2021, this metric increased slightly to 57.19 days, suggesting a longer period to convert investments into cash receipts.
However, in December 2022, there was a significant spike in the cash conversion cycle, reaching 62.62 days. This extended cycle duration may imply challenges in efficiently managing working capital and converting sales into cash.
The trend reversed in December 2023 when the cash conversion cycle decreased to 47.32 days, indicating an improvement in the efficiency of the company's working capital management. Nonetheless, by December 2024, the cycle lengthened again to 55.23 days.
Overall, the fluctuating nature of Stepan Company's cash conversion cycle suggests varying efficiencies in managing receivables, inventory, and payables. This metric is crucial as it reflects how effectively the company can convert its resources into cash, highlighting areas for potential operational improvements.
Peer comparison
Dec 31, 2024