Toro Co (TTC)
Cash conversion cycle
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 95.49 | 96.57 | 77.76 | 80.13 | 84.01 |
| Days of sales outstanding (DSO) | days | 33.09 | 27.11 | 28.81 | 28.47 | 31.54 |
| Number of days of payables | days | 37.74 | 53.17 | 53.00 | 44.70 | 41.15 |
| Cash conversion cycle | days | 90.83 | 70.51 | 53.57 | 63.90 | 74.39 |
October 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 95.49 + 33.09 – 37.74
= 90.83
The cash conversion cycle (CCC) of Toro Co. measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales. Looking at the trend over the past five years, Toro Co.'s cash conversion cycle has been fluctuating.
In 2023, the company's cash conversion cycle increased to 113.35 days, indicating that it took longer for the company to convert its investments into cash. This could suggest potential issues with inventory management or collections of accounts receivable.
Comparing this to the previous year, there is a clear increase from 84.19 days in 2022. However, in 2021, the cycle increased significantly from 61.33 days to 76.31 days in 2020.
This fluctuation may indicate changes in the company's operational efficiency, supply chain management, or sales collection processes. It is important for Toro Co. to investigate the underlying reasons for these fluctuations and take steps to optimize its working capital management to ensure a more stable and efficient cash conversion cycle.