Sherwin-Williams Co (SHW)
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 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 43.48 | 41.72 | 45.14 | 50.46 | 49.89 | 49.14 | 48.09 | 47.84 | 40.70 | 39.40 | 39.82 | 42.62 | 42.44 | 44.23 | 53.15 | 63.68 | 69.92 | 66.44 | 68.45 | 71.73 |
| Days of sales outstanding (DSO) | days | 39.93 | 47.52 | 50.50 | 47.92 | 43.05 | 49.45 | 53.09 | 50.73 | 43.86 | 49.12 | 49.05 | 47.63 | 41.95 | 50.60 | 51.47 | 46.74 | 42.59 | 50.69 | 54.79 | 48.49 |
| Number of days of payables | days | 43.20 | 45.07 | 46.08 | 46.84 | 46.28 | 54.17 | 59.68 | 58.78 | 50.75 | 58.04 | 55.25 | 51.15 | 49.82 | 54.37 | 54.93 | 63.79 | 69.42 | 73.85 | 74.70 | 68.15 |
| Cash conversion cycle | days | 40.21 | 44.17 | 49.56 | 51.54 | 46.66 | 44.43 | 41.50 | 39.80 | 33.81 | 30.48 | 33.63 | 39.10 | 34.57 | 40.46 | 49.69 | 46.63 | 43.09 | 43.29 | 48.54 | 52.07 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 43.48 + 39.93 – 43.20
= 40.21
The cash conversion cycle of Sherwin-Williams Co. has shown some fluctuations over the past eight quarters. The cycle measures the average time it takes for the company to convert its investments in inventory into cash received from sales.
In Q1 2022, the company had a relatively low cash conversion cycle of 33.62 days, indicating an efficient management of inventory and accounts receivable. However, this figure increased gradually in the subsequent quarters, peaking at 52.50 days in Q1 2023.
The rise in the cash conversion cycle suggests a lengthening period between paying suppliers for inventory and receiving cash from customers, which could potentially strain the company's liquidity and working capital management.
It is worth noting that the cycle decreased to 39.52 days in Q4 2023, which might indicate improvements in inventory turnover and accounts receivable collection efficiency.
Overall, monitoring and managing the cash conversion cycle is crucial for Sherwin-Williams Co. to optimize its working capital management and enhance its financial performance.
Peer comparison
Dec 31, 2023