United Airlines Holdings Inc (UAL)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	16.74	13.70	22.78	24.51	13.80
Days of sales outstanding (DSO)	days	13.34	15.18	26.31	34.57	11.70
Number of days of payables	days	41.14	41.94	59.37	41.95	34.80
Cash conversion cycle	days	-11.06	-13.06	-10.28	17.13	-9.30

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 16.74 + 13.34 – 41.14
= -11.06

The cash conversion cycle of United Airlines Holdings Inc has exhibited fluctuations over the past five years. In 2020, the company's cash conversion cycle was at its longest, standing at 30.78 days, indicating that United Airlines took approximately a month to convert its investments in operations back into cash. This was followed by a significant improvement in 2021 when the cycle decreased to 24.64 days. However, the cycle then increased in 2022 to 14.62 days before further improving in 2023 to 12.90 days.

A decreasing cash conversion cycle indicates that United Airlines has been able to manage its working capital more efficiently, potentially through faster collection of receivables, more effective inventory management, or extending payment terms with suppliers. This shortened cycle implies that the company is able to generate cash more quickly from its operations, which can be a positive signal of financial health and operational efficiency.

Furthermore, the significant fluctuations in the cash conversion cycle over the years may reflect changes in the company's business strategies, market conditions, or operational efficiency. It is essential for investors and stakeholders to monitor these trends to understand how United Airlines is managing its working capital and cash flow.