Trane Technologies plc (TT)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 191.34 | 169.43 | 201.94 | 246.64 | 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 |
| Days of sales outstanding (DSO) | days | 56.93 | 64.17 | 67.07 | 59.54 | 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 |
| Number of days of payables | days | 208.47 | 182.88 | 199.80 | 207.89 | 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 |
| Cash conversion cycle | days | 39.80 | 50.72 | 69.22 | 98.29 | 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 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 191.34 + 56.93 – 208.47
= 39.80
The cash conversion cycle of Trane Technologies plc fluctuated over the period from March 31, 2020, to December 31, 2024. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
The cash conversion cycle started at 50.03 days on March 31, 2020, peaked at 106.60 days on March 31, 2023, and then decreased to 39.80 days by December 31, 2024. A shorter cash conversion cycle is generally favorable as it indicates that a company is able to quickly convert its investments into cash, improving liquidity and operational efficiency.
Throughout the period, Trane Technologies plc experienced fluctuations in its cash conversion cycle, which could be attributed to changes in inventory management, accounts payable, and accounts receivable processes. It is important for the company to monitor and manage its cash conversion cycle effectively to ensure optimal working capital management and cash flow efficiency.
See also:
Trane Technologies plc Cash Conversion Cycle (Quarterly Data)