Warner Music Group (WMG)
Cash conversion cycle
| Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 6.38 | 7.12 | 8.70 | 8.07 | 8.07 | 7.31 | 7.57 | 6.60 | 6.81 | 6.22 | 7.70 | 6.49 | 6.12 | 5.48 | 6.15 | 4.53 | 5.50 | 5.70 | 6.56 | 6.04 |
| Days of sales outstanding (DSO) | days | 70.28 | 71.32 | 69.21 | 68.98 | 63.98 | 63.00 | 59.69 | 60.65 | 58.18 | 61.25 | 57.86 | 60.41 | 60.54 | 71.04 | 63.06 | 59.89 | 61.76 | 71.10 | 63.21 | 61.86 |
| Number of days of payables | days | 20.13 | 16.52 | 20.71 | 17.32 | 19.95 | 15.76 | 18.79 | 18.79 | 23.18 | 20.29 | 23.49 | 18.56 | 18.22 | 16.51 | 20.54 | 15.72 | 20.80 | 17.71 | 23.04 | 18.76 |
| Cash conversion cycle | days | 56.53 | 61.92 | 57.20 | 59.73 | 52.09 | 54.54 | 48.47 | 48.45 | 41.81 | 47.17 | 42.06 | 48.34 | 48.45 | 60.00 | 48.66 | 48.69 | 46.46 | 59.09 | 46.73 | 49.14 |
March 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 6.38 + 70.28 – 20.13
= 56.53
Warner Music Group's cash conversion cycle has displayed fluctuations over the past few quarters. The company's cash conversion cycle, which measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales and back into cash, was 56.53 days as of March 31, 2024.
Reviewing historical data, we note that Warner Music Group experienced a peak cash conversion cycle of 61.92 days in December 2023 and a low of 41.81 days in March 2022. This indicates variability in the company's ability to efficiently manage its cash flow and working capital during these periods.
Analyzing the trend, there seems to be some seasonality in the cash conversion cycle as it fluctuates throughout the year. Generally, a shorter cash conversion cycle is favorable as it implies that the company is able to quickly convert its investments into cash.
Warner Music Group's management should continue to closely monitor and optimize its cash conversion cycle to ensure efficient working capital management, adequate liquidity, and overall financial health.
Peer comparison
Mar 31, 2024