Somnigroup International Inc. (SGI)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 63.05 | 70.54 | 61.08 | 55.88 | 53.91 |
| Days of sales outstanding (DSO) | days | 33.81 | 31.34 | 31.05 | 38.09 | 43.72 |
| Number of days of payables | days | 40.63 | 45.73 | 56.88 | 58.03 | 52.09 |
| Cash conversion cycle | days | 56.23 | 56.16 | 35.25 | 35.94 | 45.54 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 63.05 + 33.81 – 40.63
= 56.23
The cash conversion cycle of Somnigroup International Inc. has shown fluctuations over the past five years.
At the end of 2019, the company's cash conversion cycle stood at 45.54 days, indicating the number of days it takes for the company to convert its investments in inventory and other resources into cash inflows from sales. By the end of 2020, the cycle improved to 35.94 days, suggesting more efficient management of working capital and quicker conversion of inventory and receivables into cash.
In 2021, the cash conversion cycle decreased further to 35.25 days, reflecting continued efficiency in managing the company's operating cycle. However, by the end of 2022 and 2023, the cycle increased to 56.16 days and 56.23 days, respectively. These increases may indicate challenges in managing working capital effectively, potentially leading to delays in inventory turnover or collection of receivables.
Overall, monitoring the cash conversion cycle is crucial for Somnigroup International Inc. to ensure efficient working capital management and improve cash flow generation from operating activities. Identifying and addressing any factors contributing to prolonged cycles can help enhance the company's financial performance and liquidity position.
Peer comparison
Dec 31, 2023