Westlake Chemical Corporation (WLK)

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	57.32	58.11	62.00	51.70	49.82
Days of sales outstanding (DSO)	days	46.57	41.62	57.89	59.05	46.58
Number of days of payables	days	30.99	27.68	38.73	30.19	25.17
Cash conversion cycle	days	72.90	72.05	81.16	80.56	71.22

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 57.32 + 46.57 – 30.99
= 72.90

The cash conversion cycle of Westlake Corporation has shown some fluctuations over the past five years. In 2023, the cash conversion cycle was 72.90 days, which was slightly higher compared to 2022 when it was 72.05 days. This indicates that in 2023, Westlake took slightly longer to convert its investments in inventory into cash receipts from customers.

Looking further back, in 2021 and 2020, the cash conversion cycle was 81.16 days and 80.56 days respectively, indicating a longer cash conversion cycle during those years. However, in 2019, the cash conversion cycle was relatively lower at 71.22 days.

Overall, the trend in the cash conversion cycle for Westlake Corporation appears to be somewhat variable with some fluctuations over the years. It would be beneficial for the company to analyze the underlying factors contributing to the fluctuations in order to optimize the efficiency of its working capital management.