Somnigroup International Inc. (SGI)
Cash conversion cycle
| 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 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 66.49 | 68.16 | 64.62 | 63.05 | 62.46 | 67.17 | 72.25 | 70.54 | 74.66 | 76.15 | 73.07 | 61.08 | 54.27 | 49.11 | 53.92 | 55.88 | 51.54 | 52.19 | 54.83 | 53.91 |
| Days of sales outstanding (DSO) | days | 34.88 | 35.52 | 35.97 | 33.81 | 38.83 | 35.12 | 34.45 | 31.34 | 34.99 | 34.01 | 30.36 | 31.05 | 40.24 | 38.35 | 37.21 | 38.09 | 46.09 | 39.23 | 42.03 | 43.72 |
| Number of days of payables | days | 46.47 | 47.46 | 45.56 | 40.63 | 46.53 | 46.02 | 46.93 | 45.73 | 54.87 | 53.21 | 58.11 | 56.88 | 65.34 | 52.52 | 47.12 | 58.03 | 61.89 | 49.83 | 53.21 | 52.09 |
| Cash conversion cycle | days | 54.90 | 56.22 | 55.03 | 56.23 | 54.76 | 56.27 | 59.77 | 56.16 | 54.78 | 56.95 | 45.32 | 35.25 | 29.17 | 34.94 | 44.01 | 35.94 | 35.74 | 41.59 | 43.65 | 45.54 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 66.49 + 34.88 – 46.47
= 54.90
The cash conversion cycle is a critical metric that reflects how efficiently a company manages its working capital. For Somnigroup International Inc., we observe fluctuations in its cash conversion cycle over the indicated time periods from December 31, 2019, to September 30, 2024.
Initially, the company's cash conversion cycle decreased from 45.54 days on December 31, 2019, to 29.17 days on September 30, 2021, indicating an improvement in efficiency in converting its resources into cash. During this period, the company was able to manage its receivables, inventory, and payables more effectively.
However, there was an upward trend in the cash conversion cycle from March 31, 2022, reaching a peak of 59.77 days on March 31, 2023. This increase suggests potential challenges in managing working capital efficiently during this period. The company might have faced difficulties in optimizing its cash inflows and outflows, impacting its overall liquidity position.
Subsequently, there was a slight improvement in the cash conversion cycle, stabilizing around 54-56 days from June 30, 2023, to September 30, 2024. While the company managed to mitigate the increase seen in early 2022-2023, it still operates with a longer cash conversion cycle compared to the more efficient levels observed in 2020-2021.
In conclusion, the analysis of Somnigroup International Inc.'s cash conversion cycle indicates fluctuations in working capital efficiency over the observed periods. The company exhibited both improvements and challenges in managing its cash flows and working capital components, reflecting its operational and financial performance during the respective time frames.
Peer comparison
Sep 30, 2024