WD-40 Company (WDFC)
Cash conversion cycle
| Aug 31, 2024 | Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 62.71 | 75.42 | 94.02 | 90.70 | 81.20 |
| Days of sales outstanding (DSO) | days | 72.75 | 67.23 | 63.43 | 66.97 | 72.08 |
| Number of days of payables | days | 28.52 | 26.87 | 29.67 | 54.50 | 42.66 |
| Cash conversion cycle | days | 106.95 | 115.78 | 127.78 | 103.17 | 110.63 |
August 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 62.71 + 72.75 – 28.52
= 106.95
The cash conversion cycle of WD-40 Company has fluctuated over the past five years. The company's cash conversion cycle measures the average number of days it takes for WD-40 to convert its resources into cash flow from sales.
In 2024, the cash conversion cycle improved to 106.95 days, indicating the company was able to manage its cash more efficiently compared to the previous year. This could be a positive sign of effective inventory management and collection of accounts receivable.
In 2023, the cash conversion cycle was 115.78 days, reflecting a slight increase from the previous year. A longer cash conversion cycle could indicate potential challenges in managing inventory levels or slower collection of receivables, which may impact the company's cash flow.
In 2022, the cash conversion cycle increased significantly to 127.78 days, reaching its highest level in the five-year period. This may suggest inefficiencies in managing working capital, potentially leading to increased costs or financial strain.
In 2021, the cash conversion cycle was 103.17 days, showing an improvement from the prior year. A shorter cash conversion cycle may indicate more efficient operations, quicker sales conversions, or tighter control over working capital.
In 2020, the cash conversion cycle was 110.63 days, signaling a slight increase compared to the previous year. This could indicate some challenges in managing cash flow, potentially impacting the company's liquidity position.
Overall, WD-40 Company has experienced fluctuations in its cash conversion cycle over the past five years, highlighting the importance of managing working capital effectively to optimize cash flow and operational efficiency.
Peer comparison
Aug 31, 2024