Advanced Drainage Systems Inc (WMS)
Cash conversion cycle
| Mar 31, 2025 | Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 98.46 | 98.02 | 86.73 | 91.64 | 84.98 |
| Days of sales outstanding (DSO) | days | 39.46 | 41.09 | 36.48 | 45.04 | 43.48 |
| Number of days of payables | days | 43.97 | 53.72 | 39.27 | 41.71 | 48.31 |
| Cash conversion cycle | days | 93.96 | 85.39 | 83.94 | 94.97 | 80.15 |
March 31, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 98.46 + 39.46 – 43.97
= 93.96
Based on the data provided, the cash conversion cycle of Advanced Drainage Systems Inc has shown some fluctuation over the past five years. The cash conversion cycle measures the time it takes for a company to convert its resources into cash flows from sales.
In March 2021, the cash conversion cycle stood at 80.15 days, indicating that on average, it took the company around 80 days to convert its invested resources back into cash. This number increased to 94.97 days by March 2022, suggesting a slightly longer period for the company to convert its resources into cash.
However, by March 2023, there was a decrease in the cash conversion cycle to 83.94 days, showing an improvement in the efficiency of the company's cash conversion process. This improvement was sustained in March 2024 with a slightly lower cycle of 85.39 days.
The trend reversed in March 2025 as the cash conversion cycle increased to 93.96 days, indicating a longer duration for the company to convert its resources back into cash compared to the previous year.
Overall, the fluctuation in the cash conversion cycle of Advanced Drainage Systems Inc suggests varying levels of efficiency in managing its working capital and cash flows over the past five years. Further analysis of the underlying factors contributing to these fluctuations would provide deeper insights into the company's operational performance and financial management.