Vontier Corp (VNT)
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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 140.72 | 44.66 | 46.43 | 49.45 | 49.38 | 55.82 | 48.91 | 49.46 | 44.32 | |||
| Days of sales outstanding (DSO) | days | 70.78 | 71.54 | 67.52 | 65.79 | 71.06 | 71.52 | — | — | 71.40 | |||
| Number of days of payables | days | 174.03 | 50.03 | 49.92 | 52.68 | 61.49 | 61.14 | — | — | 65.61 | |||
| Cash conversion cycle | days | 37.47 | 66.17 | 64.04 | 62.56 | 58.94 | 66.20 | 48.91 | 49.46 | 50.11 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 140.72 + 70.78 – 174.03
= 37.47
The cash conversion cycle for Vontier Corporation has varied over the past 8 quarters, with fluctuations observed in the efficiency of the company's working capital management. In Q1 2022, the cash conversion cycle was at its lowest at 34.30 days, indicating that Vontier was able to efficiently convert its investments in inventory and accounts receivable into cash. However, this efficiency decreased in subsequent quarters, reaching a peak of 52.42 days in Q3 2022 and then again in Q3 2023 at 52.21 days.
The increase in the cash conversion cycle indicates potential issues in managing the company's working capital effectively, which could lead to higher carrying costs and reduced liquidity. It is important for Vontier to focus on optimizing its inventory turnover and accounts receivable collection process to shorten the cash conversion cycle and improve its overall efficiency in converting operating resources into cash.
Overall, the trend in Vontier's cash conversion cycle suggests that the company may benefit from implementing more efficient working capital management strategies to enhance cash flow and financial performance in the future.
Peer comparison
Dec 31, 2023