Sensient Technologies Corporation (SXT)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	160.16	167.13	165.74	499.70	485.76
Days of sales outstanding (DSO)	days	67.99	69.43	77.53	69.70	64.87
Number of days of payables	days	37.10	36.62	41.83	152.37	136.71
Cash conversion cycle	days	191.05	199.95	201.45	417.03	413.91

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 160.16 + 67.99 – 37.10
= 191.05

The cash conversion cycle of Sensient Technologies Corporation has shown a declining trend over the past few years. On December 31, 2020, the cash conversion cycle was 413.91 days, indicating that the company took over a year to convert its investments in inventory and accounts receivable into cash. However, by December 31, 2024, the cash conversion cycle had significantly improved to 191.05 days, reflecting a more efficient management of working capital.

This positive trend suggests that Sensient Technologies Corporation has been able to streamline its operations, reduce inventory holding periods, and accelerate the collection of receivables, leading to a quicker conversion of working capital into cash. A lower cash conversion cycle indicates improved liquidity and cash flow management, which can enhance the company's financial health and operational efficiency.

Overall, the decreasing trend in the cash conversion cycle demonstrates Sensient Technologies Corporation's efforts in optimizing its working capital management, potentially resulting in improved profitability and financial performance in the long term.