Vestis Corporation (VSTS)
Cash conversion cycle
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 23.41 | 106.29 | 110.20 | 115.17 | — |
| Days of sales outstanding (DSO) | days | 23.10 | — | — | — | — |
| Number of days of payables | days | 23.15 | — | — | — | — |
| Cash conversion cycle | days | 23.37 | 106.29 | 110.20 | 115.17 | 0.00 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 23.41 + 23.10 – 23.15
= 23.37
Vestis Corporation's cash conversion cycle has shown a notable improvement over the years. In 2020, the cash conversion cycle was notably efficient, possibly indicating a quick turnover of inventory and accounts receivable. However, in 2021, 2022, and 2023, the cash conversion cycle increased significantly, reaching peaks of 115.17 days in 2021, 110.20 days in 2022, and 106.29 days in 2023. This deterioration may suggest inefficiencies in managing inventory, collecting receivables, or both.
The significant reduction in the cash conversion cycle to 23.37 days in 2024 is a positive sign, indicating that Vestis Corporation has potentially improved its working capital management. A lower cash conversion cycle means the company is able to turn its inventory into cash more quickly and efficiently, which can enhance liquidity and profitability.
Overall, the trend in Vestis Corporation's cash conversion cycle indicates fluctuations over the years, with a notable improvement in 2024. It would be important to further investigate the reasons behind these fluctuations to identify any underlying issues or improvements in the company's operations and financial management.
Peer comparison
Sep 30, 2024