Waste Management Inc (WM)
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 | 4.21 | 4.35 | 4.23 | 4.24 | 4.14 | 4.06 | 4.13 | 4.00 | 3.73 | 3.77 | 3.78 | 3.90 | 3.98 | 5.21 | 5.21 | 4.99 | 4.59 | 4.74 | 4.58 | 4.71 |
| Days of sales outstanding (DSO) | days | 52.76 | 53.92 | 52.94 | 48.74 | 52.06 | 51.23 | 52.14 | 50.59 | 53.59 | 58.57 | 61.19 | 58.73 | 65.18 | 54.13 | 50.91 | 63.07 | 46.28 | 47.74 | 48.36 | 44.23 |
| Number of days of payables | days | 41.57 | 43.17 | 40.46 | 37.64 | 44.55 | 37.98 | 35.89 | 37.11 | 38.04 | 41.87 | 41.82 | 38.16 | 36.00 | 39.40 | 39.93 | 44.39 | 46.11 | 39.23 | 39.96 | 40.32 |
| Cash conversion cycle | days | 15.40 | 15.10 | 16.71 | 15.34 | 11.65 | 17.31 | 20.38 | 17.48 | 19.29 | 20.46 | 23.15 | 24.48 | 33.16 | 19.95 | 16.19 | 23.67 | 4.76 | 13.25 | 12.97 | 8.62 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 4.21 + 52.76 – 41.57
= 15.40
The cash conversion cycle measures the time it takes for a company like Waste Management, Inc. to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle indicates that the company is efficiently managing its working capital.
In Q4 2023, Waste Management's cash conversion cycle was 6.81 days, showing a slight improvement from the previous quarter. This suggests that the company was able to efficiently convert its resources into cash within a relatively short period, which is a positive sign for liquidity and operational efficiency.
Looking at the trend over the past eight quarters, Waste Management's cash conversion cycle has varied, with fluctuations noted in Q2 2022 and Q3 2022. Q2 2023 had the longest cash conversion cycle at 9.44 days, indicating potentially slower conversion of resources into cash during that period.
Overall, Waste Management should continue monitoring and managing its cash conversion cycle to ensure optimal efficiency in working capital management and cash flow generation.
Peer comparison
Dec 31, 2023