Transdigm Group Incorporated (TDG)
Cash conversion cycle
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 209.53 | 215.03 | 208.66 | 189.29 | 190.67 |
| Days of sales outstanding (DSO) | days | 63.48 | 68.18 | 65.01 | 60.17 | 51.50 |
| Number of days of payables | days | 36.08 | 40.59 | 43.71 | 36.26 | 32.40 |
| Cash conversion cycle | days | 236.94 | 242.63 | 229.97 | 213.20 | 209.77 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 209.53 + 63.48 – 36.08
= 236.94
The cash conversion cycle of Transdigm Group Incorporated has shown some fluctuations over the past five years. In the most recent period ending on September 30, 2024, the cash conversion cycle stood at 236.94 days, slightly lower than in the previous fiscal year.
Generally, a longer cash conversion cycle indicates that the company is taking more time to convert its investments in inventory and other resources into cash from sales. This can potentially tie up more of the company's funds and may indicate inefficiencies in managing working capital.
It is noteworthy that Transdigm's cash conversion cycle has been relatively stable in the range of 209 to 242 days over the last five years, with no significant upward trend. This could suggest that the company has been able to effectively manage its working capital and operations to maintain a consistent cash conversion cycle despite external economic conditions.
However, analyzing the components of the cash conversion cycle, such as days inventory outstanding, days sales outstanding, and days payables outstanding, would provide a more detailed insight into the efficiency of Transdigm's working capital management.
Overall, while Transdigm Group Incorporated's cash conversion cycle has fluctuated slightly over the years, the company's ability to maintain a relatively stable cycle may indicate effective working capital management practices.