Tetra Tech Inc (TTEK)
Cash conversion cycle
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 536.08 | — | — | — | — |
| Days of sales outstanding (DSO) | days | 75.36 | 80.35 | 78.95 | 77.91 | 81.58 |
| Number of days of payables | days | 816.21 | 733.76 | 1,364.91 | 1,359.68 | 871.53 |
| Cash conversion cycle | days | -204.77 | -653.41 | -1,285.95 | -1,281.77 | -789.95 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 536.08 + 75.36 – 816.21
= -204.77
The cash conversion cycle for Tetra Tech Inc has shown a significant improvement over the past five years. The negative cash conversion cycle indicates that the company is efficiently managing its working capital, specifically the time it takes to convert its investments in inventory and accounts receivable into cash received from sales.
In 2024, Tetra Tech Inc achieved a cash conversion cycle of -204.77 days, a substantial improvement from the previous year's -653.41 days. This indicates that the company has been able to shorten the time it takes to convert its resources into cash. The negative value signifies that Tetra Tech is able to collect cash from its customers before paying its suppliers and creditors, resulting in a favorable cash flow position.
The trend of decreasing negative cash conversion cycle over the years is a positive indication of Tetra Tech Inc's operational efficiency and effective management of its working capital. By improving its cash conversion cycle, the company can enhance its liquidity, reduce financing costs, and optimize its cash position for investment or strategic initiatives.
Peer comparison
Sep 30, 2024