World Kinect Corporation (WKC)
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 | 5.20 | 4.91 | 5.71 | 6.44 | 6.06 |
| Days of sales outstanding (DSO) | days | 20.66 | 20.36 | 27.43 | 22.20 | 28.67 |
| Number of days of payables | days | 24.24 | 22.23 | 28.67 | 22.73 | 26.61 |
| Cash conversion cycle | days | 1.62 | 3.05 | 4.47 | 5.92 | 8.13 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 5.20 + 20.66 – 24.24
= 1.62
The cash conversion cycle of World Kinect Corp has been steadily decreasing over the past five years, indicating an improvement in the efficiency of its working capital management. The company's ability to convert its resources into cash has significantly improved from 8.13 days in 2019 to 1.89 days in 2023. This trend suggests that World Kinect Corp has been able to streamline its operations, reduce its inventory holding periods, and collect receivables more swiftly.
A declining cash conversion cycle is generally a positive indicator as it implies that the company is able to generate cash quickly from its operational activities. It also suggests that the company is effectively managing its inventory levels and accounts receivables, leading to a shorter cash conversion cycle.
Overall, the decreasing trend in World Kinect Corp's cash conversion cycle signifies an enhancement in its working capital efficiency and a potential improvement in its overall financial performance.