World Kinect Corporation (WKC)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 4.56 | 5.20 | 4.91 | 5.71 | 6.44 |
| Days of sales outstanding (DSO) | days | 21.06 | 20.66 | 20.36 | 27.43 | 22.20 |
| Number of days of payables | days | 24.19 | 24.24 | 22.23 | 28.67 | 22.73 |
| Cash conversion cycle | days | 1.42 | 1.62 | 3.05 | 4.47 | 5.92 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 4.56 + 21.06 – 24.19
= 1.42
The cash conversion cycle of World Kinect Corporation has shown a decreasing trend over the past five years, reflecting an improvement in the company's efficiency in managing its working capital. The cycle decreased from 5.92 days on December 31, 2020, to 1.42 days on December 31, 2024. This indicates that the company is able to convert its investments in inventory into cash more quickly.
A decreasing cash conversion cycle suggests that World Kinect Corporation is taking less time to sell its inventory, collect its receivables, and pay its payables, which is a positive sign of effective management of working capital. The company's ability to convert its assets into cash efficiently is crucial for its liquidity and financial health.
Overall, the declining trend in the cash conversion cycle indicates that World Kinect Corporation has been successful in optimizing its working capital management, which can contribute to improved profitability and financial stability in the long term.