Terex Corporation (TEX)
Days of sales outstanding (DSO)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Receivables turnover | 9.40 | 8.07 | 7.66 | 8.07 | 10.83 | |
| DSO | days | 38.81 | 45.24 | 47.68 | 45.23 | 33.70 |
December 31, 2023 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 9.40
= 38.81
To analyze Terex Corp.'s days of sales outstanding (DSO) over the past five years, we observe a fluctuating trend. DSO measures the average number of days it takes for the company to collect revenue after making a sale. A lower DSO indicates a faster collection of receivables, which may improve cash flow and liquidity.
In 2019, Terex Corp.'s DSO stood at 33.70 days, reflecting a relatively efficient collections process. However, by the end of 2021, the DSO had increased to 47.68 days, indicating a slowdown in receivables collection, potentially affecting cash flow and working capital management.
The DSO decreased in 2022 to 45.24 days but increased slightly in 2023 to 38.81 days. While the reduction in DSO in 2022 is a positive sign, the subsequent increase in 2023 suggests that the company may be taking longer to collect its sales compared to the previous year.
It is essential for Terex Corp. to monitor its DSO closely and implement strategies to improve collections efficiency, such as tightening credit terms, incentivizing early payments, or enhancing the credit management process. An increase in DSO can indicate potential issues with credit policies, customer payment behavior, or economic conditions impacting customers' ability to pay in a timely manner.