Steel Dynamics Inc (STLD)

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	71.92	71.17	71.05	67.37	70.77	77.74	87.85	91.11	98.79	90.65	88.75	92.49	82.39	73.04	70.00	68.92	69.01	69.48	68.16	69.97
Days of sales outstanding (DSO)	days	31.36	35.43	38.24	35.97	33.71	36.91	44.43	42.87	38.00	44.01	44.31	47.18	36.95	35.87	32.27	35.65	29.45	32.69	33.43	34.68
Number of days of payables	days	—	—	—	25.40	22.78	26.55	32.89	31.14	35.44	37.84	41.74	46.43	33.99	31.91	31.13	25.26	20.82	20.40	19.51	21.82
Cash conversion cycle	days	103.28	106.60	109.29	77.94	81.71	88.10	99.38	102.84	101.35	96.81	91.32	93.24	85.35	77.00	71.14	79.30	77.63	81.77	82.08	82.83

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 71.92 + 31.36 – —
= 103.28

The cash conversion cycle of Steel Dynamics Inc. has demonstrated fluctuations over the past eight quarters.

In Q1 2022, the cash conversion cycle was reported at 101.89 days, indicating an extended period required to convert the company's investment in inventory back into cash. Subsequently, the cycle improved in Q2 and Q3 2022, but still remained at high levels of 98.37 days and 88.37 days, respectively.

Moving into 2023, there was further improvement seen in Q4 2022 with a cycle of 81.48 days, followed by a decrease to 77.67 days in Q1 2023, suggesting a more efficient management of cash flow and working capital.

However, the trend reversed in the subsequent quarters with an increase to 84.82 days in Q2 2023 and 80.95 days in Q3 2023. The cycle then decreased again to 75.93 days in Q4 2023, indicating a positive change towards a shorter period to convert resources invested in the production process back into cash.

Overall, the fluctuations in the cash conversion cycle of Steel Dynamics Inc. highlight the company's varying efficiency in managing its working capital and ability to turn inventory into cash, with efforts towards shortening the cycle seen in recent quarters.