Stepan Company (SCL)
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 | 55.23 | 56.85 | 50.45 | 48.09 | 47.32 | 48.49 | 55.11 | 57.02 | 62.62 | 62.73 | 55.93 | 53.93 | 57.19 | 58.69 | 58.30 | 55.56 | 53.73 | 50.56 | 51.79 | 48.71 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 55.23 | 56.85 | 50.45 | 48.09 | 47.32 | 48.49 | 55.11 | 57.02 | 62.62 | 62.73 | 55.93 | 53.93 | 57.19 | 58.69 | 58.30 | 55.56 | 53.73 | 50.56 | 51.79 | 48.71 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 55.23 + — – —
= 55.23
Stepping into the details of Stepan Company's cash conversion cycle, we observe fluctuations over the given period from 2020 to 2024. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
Starting at approximately 48.71 days in March 2020, the cycle increased gradually to reach around 58.69 days by September 2021. This rise indicates potential inefficiencies in managing inventory, accounts receivable, and payables during this period. However, from September 2021 to December 2023, the cycle displayed a downward trend, hitting a low point of 47.32 days by the end of December 2023.
Subsequently, the cycle slightly increased to around 56.85 days by September 2024, showcasing a partial reversal of the earlier progress made in optimizing working capital management. The overall trend suggests that Stepan Company overall exhibited improvements in efficiency during the period under review, with minor fluctuations.
Key factors impacting the cash conversion cycle include inventory turnover, accounts receivable collection efficiency, and accounts payable management. Stepan Company may benefit from further streamlining its operational and financial processes to enhance cash flow generation and working capital efficiency in the future.
Peer comparison
Dec 31, 2024