World Kinect Corporation (WKC)
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 | 5.20 | 4.93 | 3.89 | 3.89 | 4.91 | 4.91 | 7.03 | 6.73 | 5.71 | 6.32 | 7.25 | 6.95 | 6.44 | 4.42 | 3.92 | 3.47 | 6.06 | 5.84 | 5.41 | 5.72 |
| Days of sales outstanding (DSO) | days | 20.66 | 21.35 | 17.03 | 18.50 | 20.36 | 21.02 | 30.20 | 33.93 | 27.43 | 28.43 | 30.13 | 33.29 | 22.20 | 18.15 | 17.31 | 20.04 | 28.67 | 26.21 | 26.01 | 25.38 |
| Number of days of payables | days | 24.24 | 24.80 | 19.07 | 20.21 | 22.23 | 21.85 | 30.64 | 34.07 | 28.67 | 29.14 | 31.36 | 33.74 | 22.73 | 16.49 | 13.82 | 16.06 | 26.61 | 23.96 | 23.76 | 22.70 |
| Cash conversion cycle | days | 1.62 | 1.48 | 1.86 | 2.18 | 3.05 | 4.07 | 6.60 | 6.58 | 4.47 | 5.61 | 6.02 | 6.50 | 5.92 | 6.09 | 7.40 | 7.45 | 8.13 | 8.09 | 7.66 | 8.40 |
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 shown a decreasing trend over the past eight quarters, indicating an improvement in the company's efficiency in managing its cash flow. This trend suggests that the company has been able to reduce the time it takes to convert its investments in inventory and other resources into cash from sales.
The company's cash conversion cycle decreased from 6.60 days in Q2 2022 to 1.35 days in Q3 2023, reaching its lowest point in Q3 2023. This indicates that World Kinect Corp has been able to streamline its operations and optimize its working capital management, leading to a quicker turnaround of cash within the business.
The gradual improvement in the cash conversion cycle suggests that the company has been successful in managing its inventory levels, accounts receivable, and accounts payable efficiently. By reducing the time it takes to convert its assets into cash, World Kinect Corp is likely enhancing its liquidity position and overall financial health.