Sotera Health Co (SHC)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 37.35 | 30.35 | 48.00 |
| Days of sales outstanding (DSO) | days | 54.87 | 49.44 | 46.43 |
| Number of days of payables | days | 54.92 | 60.58 | 64.43 |
| Cash conversion cycle | days | 37.30 | 19.21 | 30.00 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 37.35 + 54.87 – 54.92
= 37.30
The cash conversion cycle of Sotera Health Co has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 35.80 days, indicating that it takes approximately 35.80 days for the company to convert its investments in inventory and other resources into cash inflows from sales. This represents an increase from the previous year's figure of 17.26 days.
The significant increase in the cash conversion cycle in 2023 compared to 2022 suggests that Sotera Health Co may be facing challenges in efficiently managing its working capital and converting its assets into cash. A longer cash conversion cycle could indicate potential liquidity issues or inefficiencies in the company's operations.
When comparing the cash conversion cycle to earlier years, we observe fluctuations, with 2023 having a higher figure than in 2021 and 2020 but lower than in 2019. This variance may be influenced by factors such as changes in the company's operating cycle, inventory management, payment terms with suppliers, and collection practices with customers.
Overall, Sotera Health Co's cash conversion cycle performance should be closely monitored to ensure effective working capital management and sustained financial health.
Peer comparison
Dec 31, 2023