Sotera Health Co (SHC)
Cash conversion cycle
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 37.35 | 30.64 | 34.35 | 38.09 | 30.35 | 30.53 | 33.50 | 39.35 | 48.00 |
| Days of sales outstanding (DSO) | days | 54.87 | 55.51 | 58.47 | 52.37 | 49.44 | 52.20 | 53.62 | 48.01 | 46.43 |
| Number of days of payables | days | 54.92 | 46.15 | 45.35 | 50.48 | 60.58 | 49.91 | 55.15 | 47.55 | 64.43 |
| Cash conversion cycle | days | 37.30 | 40.00 | 47.48 | 39.98 | 19.21 | 32.82 | 31.97 | 39.81 | 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 shown some fluctuations over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 35.80 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.
Compared to the previous quarters, the Q4 2023 cash conversion cycle of 35.80 days was lower than Q3 2023 (37.91 days) but higher than Q2 2023 (45.88 days) and Q1 2023 (37.86 days). This suggests that the company improved its efficiency in converting inventory and other resources into cash in Q4 2023 compared to the prior quarter but was less efficient than in Q1 2023.
Furthermore, when looking at year-over-year comparisons, the Q4 2023 cash conversion cycle was higher than in Q4 2022 (17.26 days), indicating a longer cash conversion cycle in the current year-end quarter compared to the prior year-end period.
Overall, the company's cash conversion cycle has shown variability over the past two years, with fluctuations in efficiency in managing its working capital and converting it into cash inflows from sales. An increasing trend in the cash conversion cycle may indicate potential liquidity challenges, while a decreasing trend may signal improved operational efficiency.
Peer comparison
Dec 31, 2023