Tetra Tech Inc (TTEK)
Cash conversion cycle
| 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 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 536.08 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 75.65 | 75.93 | 77.07 | 78.60 | 79.69 | 88.14 | — | — | 78.66 | — | — | — | 77.81 | 81.53 | 80.39 | 84.97 | 81.54 | 76.30 | 77.84 | 85.43 |
| Number of days of payables | days | 816.21 | 922.22 | 1,013.00 | 72.32 | 35.80 | 39.14 | 49.15 | 71.47 | 1,364.91 | 1,287.80 | 1,280.97 | 1,499.67 | 1,359.68 | 1,213.03 | 1,171.96 | 1,261.07 | 1,065.50 | 54.03 | 29.94 | 24.52 |
| Cash conversion cycle | days | -204.48 | -846.29 | -935.93 | 6.28 | 43.89 | 49.00 | -49.15 | -71.47 | -1,286.25 | -1,287.80 | -1,280.97 | -1,499.67 | -1,281.86 | -1,131.49 | -1,091.57 | -1,176.10 | -983.95 | 22.26 | 47.90 | 60.91 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 536.08 + 75.65 – 816.21
= -204.48
The cash conversion cycle measures how long it takes for a company to convert its investments in inventory and other resources into cash received from sales. A negative cash conversion cycle indicates that the company is managing its working capital efficiently.
Looking at Tetra Tech Inc's cash conversion cycle over the past years, we can see fluctuations and periods of both positive and negative cycles. In general, from September 2020 to March 2023, the company had negative cash conversion cycles, which means it was able to convert its investments into cash quickly. However, in the following quarters up to December 2023, the cash conversion cycle turned positive, indicating a delay in converting resources into cash.
The most recent data for September 2024 shows a significantly improved negative cash conversion cycle, which suggests that Tetra Tech Inc has managed its working capital effectively, possibly by reducing the time it takes to sell inventory and collect cash from customers.
Overall, a negative cash conversion cycle is favorable as it indicates efficient management of working capital. Tetra Tech Inc should continue to focus on improving its cash conversion cycle to enhance liquidity and overall financial performance.
Peer comparison
Sep 30, 2024