Waste Management Inc (WM)
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 | 4.19 | 4.12 | 3.72 | 3.99 | 3.40 |
| Days of sales outstanding (DSO) | days | 52.70 | 52.06 | 53.57 | 65.15 | 47.71 |
| Number of days of payables | days | 41.39 | 44.38 | 37.89 | 36.03 | 34.16 |
| Cash conversion cycle | days | 15.50 | 11.80 | 19.40 | 33.10 | 16.94 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 4.19 + 52.70 – 41.39
= 15.50
The cash conversion cycle of Waste Management, Inc. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 6.81 days, indicating an improvement compared to the previous year's cycle of 3.43 days. This suggests that Waste Management was able to convert its investments in raw materials and production back into cash more efficiently in 2023.
Looking further back, the trend in the cash conversion cycle reveals variability. In 2021, the cycle was 11.09 days, representing an increase from 2020 when it was 23.98 days. This substantial increase in 2020 may have been due to challenges in converting inventory and receivables into cash efficiently within the given timeframe.
Compared to 2019, when the cash conversion cycle was 17.91 days, there has been an overall improvement in the efficiency of the company in managing its working capital. However, it is important to note that the fluctuations in the cash conversion cycle of Waste Management, Inc. over the past five years highlight the importance of closely monitoring the company's working capital management and implementing strategies to enhance efficiency further.
Peer comparison
Dec 31, 2023