Waste Management Inc (WM)
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 | 4.67 | 4.19 | 4.12 | 3.72 | 3.99 |
| Days of sales outstanding (DSO) | days | 60.73 | 52.70 | 52.06 | 53.57 | 65.15 |
| Number of days of payables | days | 46.38 | 41.39 | 44.38 | 37.89 | 36.03 |
| Cash conversion cycle | days | 19.03 | 15.50 | 11.80 | 19.40 | 33.10 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 4.67 + 60.73 – 46.38
= 19.03
The cash conversion cycle of Waste Management Inc has shown a consistent improvement over the past five years. As of December 31, 2020, the company's cash conversion cycle was 33.10 days, indicating it took approximately 33 days to convert its investments in raw materials and other inputs into cash from sales. By December 31, 2024, this cycle had decreased to 19.03 days, reflecting a more efficient management of working capital.
The downward trend in the cash conversion cycle suggests that Waste Management Inc has been able to streamline its operations and manage its inventories, receivables, and payables more effectively. A shorter cash conversion cycle is generally seen as a positive indicator, as it signifies that the company is able to generate cash quickly from its operating activities.
Overall, Waste Management Inc's improving cash conversion cycle indicates enhanced efficiency in its cash management and working capital practices, which could contribute to its financial health and sustainability in the long term.
Peer comparison
Dec 31, 2024