Steel Dynamics Inc (STLD)

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	68.73	70.77	98.79	82.39	69.01
Days of sales outstanding (DSO)	days	31.36	33.71	38.00	36.95	29.45
Number of days of payables	days	—	22.78	35.44	33.99	20.82
Cash conversion cycle	days	100.09	81.71	101.35	85.35	77.63

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 68.73 + 31.36 – —
= 100.09

Steel Dynamics Inc.'s cash conversion cycle has exhibited fluctuations over the past five years. The company's cash conversion cycle decreased to 75.93 days as of December 31, 2023, compared to 81.48 days in the previous year. This suggests that the company has become more efficient in managing its working capital and converting its inventory and receivables into cash.

Looking further back, the cash conversion cycle was notably higher at 100.96 days as of December 31, 2021, indicating a longer time taken to convert its resources into cash. However, in the preceding year, the cash conversion cycle decreased to 84.95 days, showing improvement in the company's working capital management.

Compared to five years ago, when the cash conversion cycle stood at 77.48 days on December 31, 2019, the current cycle is marginally higher. This implies that there may have been some challenges or inefficiencies in the company's cash conversion process in recent years.

Overall, Steel Dynamics Inc. has made progress in optimizing its cash conversion cycle recently, reflecting enhanced efficiency in managing its working capital and converting assets into cash. It is essential for the company to continue monitoring and improving its cash conversion cycle to ensure liquidity and operational effectiveness.