ScanSource Inc (SCSC)
Cash conversion cycle
| 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 | Dec 31, 2019 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 59.02 | 57.38 | 60.28 | 66.60 | 75.70 | 74.91 | 76.62 | 70.67 | 65.83 | 65.35 | 64.13 | 56.97 | 55.52 | 65.39 | 56.47 | 53.34 | 53.11 | 64.71 | 72.06 | 68.51 |
| Days of sales outstanding (DSO) | days | 74.96 | 62.28 | 67.46 | 68.30 | 80.04 | 66.02 | 75.90 | 75.41 | 82.88 | 68.70 | 67.89 | 66.35 | 74.57 | 74.75 | 74.26 | 66.34 | 59.71 | 59.21 | 61.41 | 66.26 |
| Number of days of payables | days | 67.69 | 60.26 | 56.67 | 62.69 | 69.06 | 65.35 | 75.29 | 74.34 | 76.47 | 78.05 | 74.48 | 69.52 | 74.98 | 74.20 | 79.05 | 68.69 | 53.03 | 59.08 | 65.26 | 62.85 |
| Cash conversion cycle | days | 66.29 | 59.40 | 71.08 | 72.22 | 86.68 | 75.58 | 77.23 | 71.74 | 72.24 | 56.00 | 57.53 | 53.80 | 55.11 | 65.94 | 51.68 | 50.99 | 59.79 | 64.84 | 68.21 | 71.92 |
June 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 59.02 + 74.96 – 67.69
= 66.29
The cash conversion cycle is a critical financial metric that indicates the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A lower cash conversion cycle is generally favorable as it reflects efficient management of working capital.
Analyzing the cash conversion cycle of ScanSource Inc over the past few quarters reveals fluctuations in the efficiency of its working capital management. The company's cash conversion cycle ranged from 50.99 days to 86.68 days in the most recent quarters.
ScanSource Inc showed improved working capital efficiency in the first quarter of 2021 with a cash conversion cycle of 50.99 days, indicating a quicker turnover of cash. However, the efficiency deteriorated in the subsequent quarters, reaching a peak of 86.68 days in the second quarter of 2023.
The company experienced significant variation in its cash conversion cycle, suggesting potential challenges in optimizing inventory management, accounts receivable collection, and accounts payable payments. A more stable and decreasing trend in the cash conversion cycle would indicate improved working capital management and operational efficiency.
Further assessment of the components contributing to the cash conversion cycle, such as inventory turnover, accounts receivable turnover, and accounts payable turnover, would provide insights into specific areas where ScanSource Inc can focus to enhance its working capital efficiency and overall financial performance.
Peer comparison
Jun 30, 2024