Tempur Sealy International Inc (TPX)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 63.05 | 70.54 | 61.08 | 55.88 | 53.91 |
| Days of sales outstanding (DSO) | days | 33.81 | 31.34 | 31.05 | 38.09 | 43.72 |
| Number of days of payables | days | 40.63 | 45.73 | 56.88 | 58.03 | 52.09 |
| Cash conversion cycle | days | 56.23 | 56.16 | 35.25 | 35.94 | 45.54 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 63.05 + 33.81 – 40.63
= 56.23
The cash conversion cycle of Tempur Sealy International Inc has shown fluctuations over the past five years. In the most recent period ending December 31, 2023, the company's cash conversion cycle was 54.39 days, reflecting the number of days it takes for Tempur Sealy to convert its investments in inventory and other resources into cash flows from sales.
Comparing this to previous years, we observe an increase from 56.16 days in 2022. This lengthening of the cash conversion cycle may indicate potential inefficiencies in managing inventory, collecting receivables, or paying suppliers. Conversely, the company had a notably shorter cash conversion cycle in 2021 at 35.25 days, showing more efficient operations in converting resources into cash during that period.
Furthermore, in 2020 and 2019, the cash conversion cycle was 35.94 days and 45.54 days, respectively. The improvement from 2019 to 2020 suggests more effective working capital management, whereas the increase in 2022 signals potential operational challenges that could affect cash flow.
Overall, Tempur Sealy International Inc should closely monitor its cash conversion cycle to optimize working capital management and strive for efficiency in converting resources into cash to support its business operations and financial health.
Peer comparison
Dec 31, 2023