Warner Music Group (WMG)
Cash conversion cycle
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 6.41 | 8.70 | 7.57 | 7.70 | 6.15 |
| Days of sales outstanding (DSO) | days | 71.69 | 69.54 | 58.99 | 58.04 | 63.06 |
| Number of days of payables | days | 18.72 | 20.71 | 18.79 | 23.49 | 20.54 |
| Cash conversion cycle | days | 59.38 | 57.53 | 47.77 | 42.25 | 48.66 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 6.41 + 71.69 – 18.72
= 59.38
Warner Music Group's cash conversion cycle has shown a fluctuating trend over the past five years. In September 2024, the cash conversion cycle increased to 59.38 days from 57.53 days in the previous year. This indicates that it took Warner Music Group 59.38 days on average to convert its investments in inventory and other resources into cash receipts from customers.
Comparing to the trend over the last five years, the cash conversion cycle has generally been increasing, indicating a slower conversion of resources into cash. This could be a concern as a longer cash conversion cycle ties up more of the company's cash in working capital and may indicate inefficiencies in managing inventory or collecting receivables.
In 2024, the cash conversion cycle exceeded the levels seen in the previous years, suggesting a potential deterioration in the company's liquidity and operational efficiency. Warner Music Group may need to focus on improving inventory management, streamlining production processes, and optimizing customer credit terms to shorten its cash conversion cycle and enhance overall performance.
Peer comparison
Sep 30, 2024