Timken Company (TKR)
Cash conversion cycle
| 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 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 109.08 | 132.60 | 137.64 | 136.53 | 139.28 | 133.36 | 140.47 | 138.47 | 133.36 | 124.97 | 124.64 | 127.45 | 127.71 | 118.71 | 115.89 | 113.74 | 115.44 | 110.93 | 117.48 | 120.25 |
| Days of sales outstanding (DSO) | days | 52.24 | 55.06 | 63.25 | 60.46 | 57.46 | 61.44 | 64.57 | 64.85 | 55.93 | 64.34 | 67.17 | 72.93 | 61.31 | 60.22 | 56.78 | 57.33 | 53.25 | 53.37 | 57.83 | 61.33 |
| Number of days of payables | days | 32.59 | 37.96 | 43.13 | 44.08 | 47.22 | 43.97 | 48.18 | 51.79 | 55.00 | 52.11 | 52.20 | 53.44 | 53.34 | 46.09 | 39.51 | 41.07 | 41.36 | 36.53 | 40.60 | 42.16 |
| Cash conversion cycle | days | 128.74 | 149.70 | 157.76 | 152.90 | 149.52 | 150.83 | 156.86 | 151.53 | 134.30 | 137.20 | 139.60 | 146.94 | 135.68 | 132.83 | 133.16 | 130.00 | 127.33 | 127.76 | 134.71 | 139.42 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 109.08 + 52.24 – 32.59
= 128.74
The cash conversion cycle of Timken Co. fluctuated over the past eight quarters, ranging from a low of 153.76 days in Q1 2022 to a high of 166.40 days in Q2 2023. The average cash conversion cycle over the period was 159.65 days.
The cash conversion cycle measures the time it takes for a company to convert its investment in inventory and other inputs into cash received from sales. A longer cash conversion cycle indicates that the company takes more time to collect cash from its sales, which may tie up valuable resources and impact liquidity.
Timken Co. experienced an upward trend in its cash conversion cycle over the past two quarters, reflecting potential challenges in converting inventory into sales and subsequently into cash. This trend may warrant further analysis to identify the underlying reasons for the increase and potential strategies to optimize the cycle.
Overall, monitoring the cash conversion cycle is crucial for assessing the efficiency of Timken Co.'s working capital management and cash flow generation. By analyzing trends and fluctuations in the cash conversion cycle, stakeholders can gain insights into the company's operational efficiency and financial performance.
Peer comparison
Dec 31, 2023