Textron Inc (TXT)
Cash conversion cycle
| 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 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 415.41 | 460.71 | 455.06 | 437.24 | 1,298.35 | 1,383.52 | 1,307.22 | 1,215.45 | 1,137.30 | — | — | — | — | 171.17 | 164.23 | 129.89 | 118.73 | 136.76 | 136.21 | 126.04 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 415.41 | 460.71 | 455.06 | 437.24 | 1,298.35 | 1,383.52 | 1,307.22 | 1,215.45 | 1,137.30 | 0.00 | 0.00 | 0.00 | 0.00 | 171.17 | 164.23 | 129.89 | 118.73 | 136.76 | 136.21 | 126.04 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 415.41 + — – —
= 415.41
The cash conversion cycle for Textron Inc has shown fluctuations over the past several periods. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally favorable as it indicates that the company is managing its working capital efficiently.
Textron Inc's cash conversion cycle has varied significantly, with peaks observed in the most recent quarters. The cycle was gradually decreasing from the end of 2020 through the middle of 2021, with cycles as short as 129.89 days in March 2020. However, there was a sharp increase in the cycle at the end of 2021, soaring to 1,137.30 days and even higher in subsequent quarters, before improving slightly in 2023.
The significant increase in the cash conversion cycle at the end of 2021 and into 2022 may be indicative of challenges in managing working capital efficiently, possibly due to slower inventory turnover, extended collection periods, or delays in payment to suppliers.
It is crucial for Textron Inc to closely monitor and address the factors contributing to the prolonged cash conversion cycle to enhance liquidity, optimize working capital management, and improve overall financial performance. A thorough review of inventory management, accounts receivable collection processes, and supplier payment terms may be warranted to streamline operations and reduce the cycle duration.
Peer comparison
Dec 31, 2023