Sonoco Products Company (SON)
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 | 51.62 | 67.07 | 44.04 | 38.23 | 41.38 |
| Days of sales outstanding (DSO) | days | 47.83 | 42.54 | 48.21 | 44.95 | 46.32 |
| Number of days of payables | days | 47.21 | 50.13 | 56.52 | 45.55 | 44.17 |
| Cash conversion cycle | days | 52.23 | 59.48 | 35.74 | 37.64 | 43.53 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 51.62 + 47.83 – 47.21
= 52.23
The cash conversion cycle of Sonoco Products Co. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle decreased to 58.95 days from 65.82 days in 2022. This indicates that the company was able to improve its efficiency in converting its investments in raw materials and production into cash during the most recent period.
Comparing 2023 to 2021, there was a significant increase in the cash conversion cycle from 42.77 days to 58.95 days. This suggests that the company may have experienced challenges in managing its working capital effectively during that year.
Similarly, from 2020 to 2021, there was an increase in the cash conversion cycle from 45.62 days to 42.77 days, indicating that the company was able to improve its working capital management efficiency during that period.
Lastly, from 2019 to 2020, there was a slight increase in the cash conversion cycle from 52.27 days to 45.62 days, showing a temporary deterioration in working capital management efficiency.
Overall, the trend in Sonoco Products Co.'s cash conversion cycle demonstrates variability over the years, with improvements in some periods and challenges in others. It is essential for the company to focus on maintaining an optimal cash conversion cycle to ensure efficient management of its working capital.
Peer comparison
Dec 31, 2023