Stepan Company (SCL)
Cash conversion cycle
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 44.08 | 45.38 | 51.43 | 53.23 | 58.41 | 58.39 | 52.16 | 50.11 | 52.87 | 53.93 | 53.29 | 50.60 | 48.91 | 46.17 | 47.31 | 44.48 | 44.72 | 44.02 | 45.39 | 43.96 |
| Days of sales outstanding (DSO) | days | 66.80 | 63.36 | 60.24 | 62.76 | 57.79 | 63.28 | 71.94 | 74.32 | 65.46 | 67.90 | 68.58 | 71.24 | 59.02 | 59.24 | 57.86 | 58.28 | 54.35 | 54.93 | 54.48 | 43.57 |
| Number of days of payables | days | 38.68 | 38.70 | 43.51 | 41.78 | 54.52 | 51.41 | 56.06 | 56.99 | 55.95 | 58.30 | 57.46 | 56.88 | 52.93 | 47.36 | 42.60 | 42.18 | 42.67 | 38.07 | 38.76 | 35.91 |
| Cash conversion cycle | days | 72.20 | 70.05 | 68.17 | 74.21 | 61.68 | 70.25 | 68.03 | 67.44 | 62.37 | 63.54 | 64.40 | 64.96 | 55.00 | 58.04 | 62.58 | 60.58 | 56.41 | 60.88 | 61.10 | 51.63 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 44.08 + 66.80 – 38.68
= 72.20
The cash conversion cycle of Stepan Co. has shown some fluctuations over the past eight quarters. In Q1 2023, the company's cash conversion cycle was 74.70 days, which was higher compared to the previous quarter, indicating a slower conversion of inventory and receivables into cash. However, the cycle improved in Q2 and Q3 2023 to 68.44 days and 70.20 days, respectively.
It is noteworthy that in Q4 2023, the cash conversion cycle increased to 72.03 days, which is higher than the cycle observed in the previous quarter, suggesting potential challenges in efficiently managing working capital and converting assets into cash during that period.
Comparing the latest data to the same quarter in the previous year, we observe an increase in the cash conversion cycle. In Q4 2022, the cycle was 61.67 days, which indicates a longer time required to convert inventory and receivables into cash in the most recent quarter.
Overall, Stepan Co. should focus on optimizing its cash conversion cycle by effectively managing its inventory, receivables, and payables to enhance liquidity and operational efficiency in the long run.
Peer comparison
Dec 31, 2023