Valvoline Inc (VVV)
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 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 9.57 | 10.40 | — | 115.68 | 19.44 | 10.06 | 37.29 | 35.46 | 36.42 | 4.14 | 51.99 | 52.84 | 55.69 | 53.10 | 52.22 | 53.95 | 48.73 | 49.66 | 38.71 | 40.23 |
| Days of sales outstanding (DSO) | days | 20.57 | 20.59 | 18.90 | 11.32 | 8.27 | 7.95 | 71.02 | 72.58 | 73.10 | 9.76 | 63.92 | 64.84 | 65.40 | 67.14 | 62.01 | 52.92 | 59.09 | 61.24 | 65.56 | 57.92 |
| Number of days of payables | days | 23.46 | 37.08 | — | 296.28 | 29.04 | 15.39 | 32.30 | 30.58 | 30.07 | 5.84 | 45.47 | 43.63 | 41.31 | 50.43 | 49.18 | 48.01 | 38.43 | 43.77 | 31.55 | 32.27 |
| Cash conversion cycle | days | 6.69 | -6.08 | 18.90 | -169.28 | -1.33 | 2.61 | 76.02 | 77.46 | 79.45 | 8.07 | 70.45 | 74.05 | 79.78 | 69.81 | 65.05 | 58.85 | 69.39 | 67.13 | 72.72 | 65.88 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 9.57 + 20.57 – 23.46
= 6.69
The cash conversion cycle of Valvoline Inc has shown fluctuations over the past quarters. In Q1 2024, the company's cash conversion cycle was 32.98 days, indicating that it takes approximately 33 days for Valvoline to convert its investments in inventory and other resources into cash received from sales. This is a slightly improved performance compared to Q4 2023 when the cash conversion cycle was 34.08 days.
However, in Q3 2023, the company achieved a cash conversion cycle of 0.00 days, which suggests that Valvoline efficiently managed its working capital during that quarter, potentially maintaining low levels of inventory and accounts receivable. This efficient performance was followed by a significant deterioration in Q2 2023, where the cash conversion cycle spiked to 131.65 days, indicating a possible issue with inventory management, collection of receivables, or payment of payables during that period.
Throughout the previous quarters, Valvoline experienced varying cash conversion cycles, with Q1 2023 at 60.87 days, Q4 2022 at 33.64 days, Q3 2022 at 104.50 days, and Q2 2022 at 103.43 days. These fluctuations suggest that the company's working capital management practices have been inconsistent, leading to inefficiencies in converting assets into cash.
Analyzing Valvoline's cash conversion cycle data highlights the importance of effectively managing working capital to optimize liquidity and operational efficiency. Consistent monitoring and improvement of the cash conversion cycle can help Valvoline streamline its business processes, enhance cash flow management, and ultimately improve its financial performance.
Peer comparison
Dec 31, 2023