SkyWest Inc (SKYW)

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	35.02	33.72	36.33	11.37	11.40
Days of sales outstanding (DSO)	days	10.47	12.38	8.99	6.19	10.19
Number of days of payables	days	129.57	115.49	173.22	34.75	29.36
Cash conversion cycle	days	-84.07	-69.39	-127.91	-17.19	-7.76

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 35.02 + 10.47 – 129.57
= -84.07

The cash conversion cycle of Skywest Inc. has fluctuated over the past five years, ranging from 6.59 days in 2020 to 12.21 days in 2022. A lower cash conversion cycle indicates that the company is able to efficiently convert its investments in inventory and receivables into cash. On the contrary, a longer cash conversion cycle may suggest inefficiencies in managing working capital.

In 2020, Skywest Inc. had the shortest cash conversion cycle of 6.59 days, indicating a swift conversion of inventory and receivables into cash. However, in 2022, the cycle increased to 12.21 days, which could be a sign of slowdown in the cash conversion process.

Overall, it is essential for Skywest Inc. to closely monitor its cash conversion cycle to optimize working capital management and ensure efficient use of resources. The company should strive to minimize the cycle duration to improve liquidity and financial performance.