Toro Co (TTC)
Cash conversion cycle
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 92.83 | 95.49 | 96.57 | 77.76 | 80.13 |
| Days of sales outstanding (DSO) | days | 36.61 | 33.09 | 27.11 | 28.81 | 28.47 |
| Number of days of payables | days | 40.45 | 37.74 | 53.17 | 53.00 | 44.70 |
| Cash conversion cycle | days | 88.98 | 90.83 | 70.51 | 53.57 | 63.90 |
October 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 92.83 + 36.61 – 40.45
= 88.98
The cash conversion cycle for Toro Co has fluctuated over the past five years, ranging from 53.57 days in 2021 to 90.83 days in 2023. In general, a shorter cash conversion cycle indicates that the company is able to efficiently convert its inventory into sales and collect payments from customers, thus managing its working capital effectively.
The increase in the cash conversion cycle from 2021 to 2023 could indicate potential issues with inventory management or delays in receiving payments from customers, which may have impacted the company's liquidity and cash flow. However, the decrease in the cycle in 2024 compared to 2023 suggests improvement in these areas.
It is important for Toro Co to monitor and analyze its cash conversion cycle regularly to identify any inefficiencies in its working capital management and take appropriate measures to optimize its operations and enhance its financial performance.