Valvoline Inc (VVV)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 10.40 | 10.30 | 4.13 | 38.70 | 33.75 |
| Days of sales outstanding (DSO) | days | 20.59 | 19.57 | 8.09 | 66.55 | 61.24 |
| Number of days of payables | days | 37.08 | 15.76 | 5.82 | 36.75 | 29.75 |
| Cash conversion cycle | days | -6.08 | 14.11 | 6.41 | 68.49 | 65.24 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 10.40 + 20.59 – 37.08
= -6.08
The cash conversion cycle (CCC) of Valvoline Inc has shown fluctuations over the past five years. In 2023, the CCC decreased to 34.08 days from 33.64 days in 2022, indicating an improvement in the company's efficiency in converting its resources into cash. This suggests that Valvoline was able to collect its receivables, sell its inventory, and pay its suppliers faster in 2023 compared to the previous year.
The significant decrease in the CCC from 2021 to 2022 is also notable, indicating a substantial improvement in the company's working capital management. The company was able to streamline its operations and optimize its cash flows during this period.
However, in 2021 and 2020, the CCC was considerably higher, indicating that Valvoline took longer to convert its resources into cash during those years. This could be a result of factors such as extended payment cycles, inventory management challenges, or slower receivables collection.
Overall, the trend in Valvoline's cash conversion cycle suggests that the company has made efforts to enhance its working capital efficiency, although there were periods of challenges in the recent past. It will be important to monitor future CCC trends to assess the company's ongoing working capital management and operational effectiveness.
Peer comparison
Sep 30, 2023