Sotera Health Co (SHC)
Days of sales outstanding (DSO)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Receivables turnover | 6.65 | 7.38 | 7.86 | |
| DSO | days | 54.87 | 49.44 | 46.43 |
December 31, 2023 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 6.65
= 54.87
The Days Sales Outstanding (DSO) ratio measures how long it takes for a company to collect its accounts receivable. A lower DSO indicates faster collection of receivables which is favorable for a company's cash flow and liquidity position.
Analyzing the trend of Sotera Health Co's DSO over the past five years reveals that the company's DSO has fluctuated within a range. In 2019, the DSO was 46.56 days, and it decreased to 50.64 days in 2020 before increasing again to 44.21 days in 2021. Subsequently, there was a marginal increase to 47.49 days in 2022 and a further increase to 53.37 days in 2023.
The increase in DSO from 2021 to 2023 suggests that Sotera Health Co may be taking longer to collect its receivables, which could potentially indicate issues with its accounts receivable management or changing customer payment behaviors. It is important for the company to closely monitor and manage its DSO to ensure the efficient collection of receivables and maintain healthy cash flows.
Further analysis of the reasons behind the upward trend in DSO is recommended to identify any underlying issues and to implement strategies to improve the collection process and optimize working capital management.
Peer comparison
Dec 31, 2023