Snap-On Inc (SNA)
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 | 566.51 | 588.71 | 595.58 | 597.20 | 7,182.50 | 6,875.97 | 5,906.78 | 5,274.19 | 4,276.78 | 3,787.17 | 3,620.97 | 3,273.79 | 2,886.36 | 2,730.00 | 2,514.59 | 2,275.32 | 2,507.19 | 1,804.64 | 1,699.28 | 373.72 |
| Days of sales outstanding (DSO) | days | 107.62 | 107.79 | 108.67 | — | 108.07 | — | — | — | 105.89 | — | — | — | 118.83 | 121.01 | 113.19 | 113.35 | 118.93 | 109.42 | 109.11 | 108.01 |
| Number of days of payables | days | 134.04 | 162.04 | 156.11 | 161.15 | 1,995.33 | 2,197.92 | 2,039.90 | 1,814.62 | 1,477.03 | 1,280.14 | 1,333.42 | 1,057.78 | 861.85 | 735.71 | 597.21 | 581.90 | 654.49 | 492.89 | 504.07 | 105.93 |
| Cash conversion cycle | days | 540.09 | 534.46 | 548.14 | 436.04 | 5,295.24 | 4,678.05 | 3,866.88 | 3,459.57 | 2,905.64 | 2,507.04 | 2,287.56 | 2,216.01 | 2,143.34 | 2,115.30 | 2,030.56 | 1,806.77 | 1,971.63 | 1,421.17 | 1,304.32 | 375.80 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 566.51 + 107.62 – 134.04
= 540.09
The cash conversion cycle of Snap-On Inc has shown significant fluctuations over the past few years. The cash conversion cycle represents the number of days it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
From the data provided, we observe that Snap-On Inc's cash conversion cycle has been quite volatile. In the most recent period, as of December 31, 2023, the company's cash conversion cycle stood at 540.09 days, indicating a time lag between the company's cash outflows for inventory and its cash inflows from sales.
Notably, there was a substantial spike in the cash conversion cycle in the fourth quarter of 2022, reaching a staggering 5,295.24 days. Such an extremely high figure can be a cause for concern as it suggests significant inefficiencies in the company's working capital management. It indicates that Snap-On Inc was tying up a substantial amount of cash in its operations, potentially leading to liquidity issues and reduced financial flexibility.
On the positive side, the company managed to improve its cash conversion cycle in the subsequent quarters of 2023, although it remained elevated compared to historical levels. This suggests that Snap-On Inc may have made efforts to streamline its operations and better manage its working capital.
Overall, the fluctuating and occasionally high cash conversion cycle of Snap-On Inc highlights the importance of efficient working capital management in optimizing cash flow and liquidity. Further analysis and potential operational adjustments may be necessary to ensure a more stable and sustainable cash conversion cycle going forward.
Peer comparison
Dec 31, 2023