Vestis Corporation (VSTS)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 106.29 | 110.20 | 115.17 | — |
| Days of sales outstanding (DSO) | days | — | — | — | — |
| Number of days of payables | days | — | — | — | — |
| Cash conversion cycle | days | 106.29 | 110.20 | 115.17 | 0.00 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 106.29 + — – —
= 106.29
The cash conversion cycle of Vestis Corporation has exhibited a decreasing trend over the past four years. In 2020, the cash conversion cycle was 0 days, indicating a highly efficient cash conversion process. However, starting from 2021, the cash conversion cycle started to increase steadily, reaching 115.17 days in 2021, and then gradually decreasing to 106.29 days in 2023.
The cash conversion cycle measures the time it takes for a company to convert its investment in inventory into cash flow from sales. A shorter cash conversion cycle indicates more efficient working capital management, as the company is able to generate cash quickly from its operations.
Although the recent decrease in the cash conversion cycle is a positive sign, it is important for Vestis Corporation to continue monitoring and managing its inventory, accounts receivable, and accounts payable processes effectively to optimize its cash flow and overall liquidity position. This will help the company maintain a healthy and sustainable financial performance in the future.
Peer comparison
Sep 30, 2023