Whirlpool Corporation (WHR)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 43.96 | 39.40 | 49.12 | 45.78 | 44.94 |
| Days of sales outstanding (DSO) | days | 29.38 | 32.03 | 51.63 | 58.88 | 38.82 |
| Number of days of payables | days | 70.40 | 63.68 | 97.86 | 96.17 | 83.81 |
| Cash conversion cycle | days | 2.94 | 7.76 | 2.89 | 8.48 | -0.06 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 43.96 + 29.38 – 70.40
= 2.94
The cash conversion cycle measures how long it takes for a company to convert its investments in inventory and other resources into cash flow from sales. A negative cash conversion cycle indicates that the company is able to collect cash from its customers before having to pay its suppliers and therefore is able to operate more efficiently.
Whirlpool Corp.'s cash conversion cycle has fluctuated over the past five years. As of December 31, 2023, the company's cash conversion cycle was reported as -1.59 days, which indicates that Whirlpool is able to collect cash from its customers before paying its suppliers, leading to an efficient cash flow cycle.
Comparing this to the prior years, in 2022, the cash conversion cycle was 0.56 days, showing a slight increase in the time it takes to convert investments into cash but still maintaining a relatively efficient cycle. In 2021 and 2020, the company had negative cash conversion cycles of -4.52 days and -3.58 days, respectively, indicating continued efficiency in its cash management.
Looking back to 2019, Whirlpool had the longest cash conversion cycle of -6.30 days, suggesting that the company has improved its efficiency in managing cash flow over the years.
Overall, Whirlpool Corp.'s consistently negative cash conversion cycles over the past five years indicate that the company efficiently manages its working capital and is successful in collecting cash from its customers promptly while optimizing its payment cycles with suppliers.
Peer comparison
Dec 31, 2023