Timken Company (TKR)
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 | 139.32 | 135.20 | 135.52 | 125.59 | 122.67 |
Days of sales outstanding (DSO) | days | — | — | — | — | — |
Number of days of payables | days | — | — | — | — | — |
Cash conversion cycle | days | 139.32 | 135.20 | 135.52 | 125.59 | 122.67 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 139.32 + — – —
= 139.32
The cash conversion cycle for Timken Company has been exhibiting a gradual increase over the years, indicating a lengthening period for the company to convert its resources into cash. From December 2020 to December 2024, the cycle has extended from 122.67 days to 139.32 days.
This trend suggests that Timken may be taking longer to convert its investments in inventory into sales and ultimately into cash receipts. A longer cash conversion cycle can tie up working capital and potentially strain the company's liquidity position.
It is crucial for Timken to closely monitor and manage its cash conversion cycle to ensure efficient utilization of resources and timely cash generation. Strategies to optimize inventory management, streamline accounts receivable processes, and negotiate favorable payment terms with suppliers could help in shortening the cash conversion cycle and improving the company's overall financial performance.
Peer comparison
Dec 31, 2024