Snap-On Inc (SNA)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 2,905.83 | 3,960.66 | 5,303.54 | 3,622.06 | 2,283.93 |
| Days of sales outstanding (DSO) | days | 110.46 | 107.62 | 108.07 | 105.89 | 118.83 |
| Number of days of payables | days | 819.02 | 937.11 | 1,473.35 | 1,250.91 | 681.97 |
| Cash conversion cycle | days | 2,197.27 | 3,131.18 | 3,938.26 | 2,477.04 | 1,720.79 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 2,905.83 + 110.46 – 819.02
= 2,197.27
The cash conversion cycle of Snap-On Inc has exhibited fluctuations over the past five years. It increased from 1,720.79 days as of December 31, 2020, to 3,938.26 days as of December 31, 2022, showing a significant deterioration in efficiency. However, there was a notable decrease in the cash conversion cycle to 2,197.27 days by December 31, 2024, indicating an improvement in managing cash flows and working capital.
The cash conversion cycle is a metric that represents the time it takes for a company to convert its investments in inventory and accounts receivable into cash flows from sales. A longer cash conversion cycle may indicate inefficiencies in managing inventory, accounts receivable, and accounts payable, leading to potential cash flow constraints.
Snap-On Inc should closely monitor its cash conversion cycle to ensure optimal working capital management, efficient inventory turnover, timely collection of receivables, and effective management of payables. This can help the company maintain liquidity, improve profitability, and sustain long-term financial health.
Peer comparison
Dec 31, 2024