Transdigm Group Incorporated (TDG)
Cash conversion cycle
| Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 209.59 | 221.12 | 214.07 | 216.09 | 215.11 | 224.52 | 225.67 | 218.76 | 208.66 | 213.19 | 202.29 | 196.92 | 189.21 | 188.74 | 193.67 | 198.58 | 190.60 | 197.89 | 173.89 | 178.30 |
| Days of sales outstanding (DSO) | days | 63.48 | 62.38 | 60.02 | 59.90 | 68.18 | 67.76 | — | 55.74 | 65.01 | — | — | — | 60.16 | — | — | — | — | — | — | — |
| Number of days of payables | days | 36.09 | 37.68 | 36.88 | 36.44 | 40.60 | 40.90 | 43.10 | 41.20 | 43.71 | 40.05 | 38.76 | 34.36 | 36.24 | 31.74 | 33.42 | 30.47 | 32.39 | 34.01 | 35.23 | 36.51 |
| Cash conversion cycle | days | 236.99 | 245.83 | 237.21 | 239.55 | 242.69 | 251.38 | 182.57 | 233.29 | 229.97 | 173.13 | 163.53 | 162.56 | 213.12 | 157.00 | 160.24 | 168.12 | 158.21 | 163.87 | 138.66 | 141.78 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 209.59 + 63.48 – 36.09
= 236.99
The cash conversion cycle of Transdigm Group Incorporated has exhibited fluctuations over the historical periods provided. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
The company's cash conversion cycle has ranged from a low of 138.66 days to a high of 251.38 days over the periods presented. A lower number indicates that the company is able to efficiently convert its resources into cash, while a higher number suggests a longer period of time required to realize cash from investments.
It is worth noting that variations in the cash conversion cycle can be influenced by factors such as inventory management, accounts receivable collection, and accounts payable turnover. A longer cash conversion cycle may indicate inefficiencies in managing inventory levels, slower collection of sales proceeds, or delayed payment to suppliers.
Analyzing the trends in the cash conversion cycle can provide insights into the company's operational efficiency and liquidity management. Management should aim to optimize the cash conversion cycle to ensure effective utilization of resources and timely generation of cash flows.