Stericycle Inc (SRCL)
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 | — | 4.50 | 6.15 | 8.46 | 6.16 |
| Days of sales outstanding (DSO) | days | 78.02 | 55.66 | 57.98 | 54.53 | 62.55 |
| Number of days of payables | days | 29.33 | 28.93 | 29.54 | 24.33 | 22.34 |
| Cash conversion cycle | days | 48.69 | 31.23 | 34.59 | 38.66 | 46.37 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 78.02 – 29.33
= 48.69
The cash conversion cycle reflects the efficiency of Stericycle Inc.'s management in managing its working capital. A lower cash conversion cycle indicates that the company is more efficient in converting its investments in inventory and accounts receivable into cash.
In 2023, the cash conversion cycle increased to 28.95 days, which is significantly higher compared to the previous year. This suggests that Stericycle took longer to convert its investments in inventory and accounts receivable into cash, which may raise concerns about the company's working capital management.
In 2022, the cash conversion cycle was relatively low at 9.53 days, indicating strong efficiency in managing working capital. However, there was a notable increase in 2023, which may require further investigation to assess the reasons behind this change.
In 2021, the cash conversion cycle was slightly higher at 8.95 days, but still at an efficient level. The increase in 2022 and even more so in 2023 may indicate potential challenges in managing working capital effectively over the past two years.
In 2020, the cash conversion cycle was 11.17 days, showing a moderate efficiency in working capital management. The efficiency improved compared to 2019 when the cycle was 22.40 days, indicating that Stericycle made progress in converting investments into cash more quickly.
Overall, Stericycle Inc. has shown fluctuating levels of efficiency in managing its cash conversion cycle over the past five years. It is essential for the company to closely monitor this metric to ensure optimal working capital management and sustainable financial health.
Peer comparison
Dec 31, 2023