Textron Inc (TXT)
Cash conversion cycle
| Dec 31, 2024 | Sep 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 | 1,239.30 | 1,391.23 | 1,330.02 | 1,237.96 | 1,465.22 | 1,484.57 | 1,437.35 | 1,298.35 | 1,383.52 | 1,307.22 | 1,215.45 | 1,137.30 | — | — | — | — | 171.17 | 164.23 | 129.89 | 118.73 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 1,239.30 | 1,391.23 | 1,330.02 | 1,237.96 | 1,465.22 | 1,484.57 | 1,437.35 | 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 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 1,239.30 + — – —
= 1,239.30
The cash conversion cycle of Textron Inc has shown significant fluctuations over the periods provided.
From December 2019 to September 2020, the cash conversion cycle increased steadily from 118.73 days to 171.17 days, indicating a lengthening of the time it takes for the company to convert its investments in inventory and other resources back into cash.
Surprisingly, by December 2020, the cash conversion cycle dropped to 0 days and remained at this level until September 2021. This sudden and sustained reduction could suggest improvements in the company's inventory management and collection of receivables.
However, starting from December 2021, the cash conversion cycle spiked dramatically, reaching as high as 1,484.57 days by June 2023. Such an extended cash conversion cycle may be a cause for concern as it could indicate inefficiencies in the company's operations or potential liquidity issues.
Although there were fluctuations in the subsequent periods, with the cycle dropping slightly by December 2024, Textron Inc would benefit from a closer examination of its working capital management practices to mitigate the risks associated with such prolonged cash conversion cycles.
Peer comparison
Dec 31, 2024