Advanced Drainage Systems Inc (WMS)

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 859.68 786.97 784.16 914.40 989.19 805.93 869.85 977.33 1,091.42 371.39 353.53 282.52 264.68 206.42 195.03 207.69 260.11 170.99 118.18 80.80
Days of sales outstanding (DSO) days 40.94 30.82 45.23 42.37 36.47 28.23 44.33 51.75 44.99 43.68 57.26 51.75 43.57 36.14 52.35 50.00 43.66 36.41 61.01 59.99
Number of days of payables days 471.14 403.58 455.19 432.53 447.94 305.68 429.51 548.28 496.75 155.95 214.14 195.89 150.47 93.65 99.61 83.91 98.29 51.22 52.91 37.34
Cash conversion cycle days 429.48 414.21 374.20 524.24 577.73 528.48 484.66 480.79 639.67 259.13 196.65 138.39 157.78 148.91 147.77 173.79 205.48 156.18 126.27 103.45

March 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 859.68 + 40.94 – 471.14
= 429.48

Advanced Drainage Systems Inc's cash conversion cycle has shown significant fluctuations over the past few quarters. The company's cash conversion cycle, which represents the time it takes to convert its resources into cash flows, ranged from a high of 639.67 days in Mar 31, 2022, to a low of 103.45 days in Jun 30, 2019.

The cash conversion cycle increased notably in the most recent quarter, Mar 31, 2024, reaching 429.48 days. This indicates that the company took longer to convert its investments in inventory and receivables into cash during this period. The increase in the cash conversion cycle could be a result of various factors such as inventory management inefficiencies, longer accounts receivable collection periods, or slower payment to suppliers.

Conversely, the lowest cash conversion cycle was reported in Dec 31, 2019, at 103.45 days, suggesting efficient working capital management during that period. This improvement may have been driven by tighter control over inventory levels, faster collection of receivables, and efficient management of payables.

Overall, Advanced Drainage Systems Inc should closely monitor its cash conversion cycle to identify areas for improvement and optimize its working capital management. Evaluating the reasons behind the fluctuations in the cash conversion cycle can help the company enhance its operational efficiency and maintain a healthy cash flow position.