Steven Madden Ltd (SHOO)
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 | 72.73 | 66.89 | 84.79 | 50.21 | 45.38 |
| Days of sales outstanding (DSO) | days | — | 42.70 | 71.39 | 76.74 | 44.21 |
| Number of days of payables | days | 51.18 | 38.17 | 45.44 | 36.59 | 20.45 |
| Cash conversion cycle | days | 21.55 | 71.42 | 110.74 | 90.36 | 69.13 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 72.73 + — – 51.18
= 21.55
The cash conversion cycle of Steven Madden Ltd. has fluctuated over the past five years, ranging from a low of 76.93 days in 2019 to a high of 115.93 days in 2021. In 2023, the cash conversion cycle increased to 88.04 days compared to the previous year's 77.94 days. This indicates that the company took longer to convert its invested resources into cash during the most recent period.
A longer cash conversion cycle can suggest inefficiencies in managing working capital, such as inventory levels, accounts receivable collection, and accounts payable payment. These inefficiencies may lead to increased financing costs and lower overall liquidity for the company.
It is essential for Steven Madden Ltd. to closely monitor its cash conversion cycle and work towards optimizing it to ensure a healthy cash flow and efficient use of resources. Identifying areas where improvements can be made, such as speeding up inventory turnover or reducing accounts receivable collection times, can help the company enhance its financial performance and competitiveness in the market.
Peer comparison
Dec 31, 2023