Trane Technologies plc (TT)
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 | 249.89 | 216.60 | 261.95 | 291.27 | 270.11 | 193.87 | 216.44 | 237.63 | 217.42 | 45.53 | 43.32 | 44.69 | 39.33 | 37.41 | 38.57 | 38.22 | 31.71 | 47.83 | 50.48 | 52.09 |
| Days of sales outstanding (DSO) | days | 61.94 | 67.17 | 70.49 | 59.24 | 64.43 | 68.64 | 68.97 | 62.30 | 63.83 | 65.78 | 69.66 | 62.68 | 65.90 | 64.12 | 60.35 | 49.59 | 48.79 | 65.68 | 70.02 | 61.66 |
| Number of days of payables | days | 235.16 | 206.86 | 242.05 | 243.91 | 283.36 | 205.02 | 229.44 | 245.16 | 253.85 | 53.97 | 57.29 | 52.36 | 50.27 | 44.39 | 39.00 | 37.78 | 34.26 | 44.50 | 48.91 | 47.26 |
| Cash conversion cycle | days | 76.68 | 76.90 | 90.38 | 106.60 | 51.18 | 57.49 | 55.97 | 54.78 | 27.40 | 57.34 | 55.70 | 55.00 | 54.96 | 57.13 | 59.92 | 50.03 | 46.24 | 69.01 | 71.59 | 66.48 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 249.89 + 61.94 – 235.16
= 76.68
The cash conversion cycle of Trane Technologies plc has exhibited fluctuations over the past eight quarters. The trend shows that the company's cash conversion cycle has generally been on the higher side, with values ranging from around 59 to 75 days.
In Q2 and Q3 of 2023, the cash conversion cycle increased significantly to 75.16 days and 69.26 days, respectively, indicating a potential delay in converting inventory and receivables into cash during these periods. This may suggest inefficiencies in managing working capital or potential issues in the company's sales and collection processes.
Conversely, in Q1 of 2022, the cash conversion cycle decreased to 59.10 days, reflecting a more efficient use of cash and quicker conversion of inventory and receivables into cash during that period.
Overall, monitoring and potentially improving the cash conversion cycle could help Trane Technologies plc optimize its working capital management and enhance its overall financial performance in the long run.
See also:
Trane Technologies plc Cash Conversion Cycle (Quarterly Data)