Worthington Industries Inc (WOR)
Cash conversion cycle
| May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 16.69 | 61.20 | 81.40 | 56.53 | 53.90 |
| Days of sales outstanding (DSO) | days | 51.75 | 61.14 | 73.88 | 41.69 | 49.79 |
| Number of days of payables | days | 10.88 | 53.89 | 81.78 | 34.47 | 43.80 |
| Cash conversion cycle | days | 57.57 | 68.45 | 73.50 | 63.75 | 59.89 |
May 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 16.69 + 51.75 – 10.88
= 57.57
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash from sales. Worthington Enterprises Inc.'s cash conversion cycle has fluctuated over the past five years, indicating varying efficiency in managing its working capital.
In 2023, the cash conversion cycle improved to 58.54 days compared to 68.45 days in 2022. This suggests that Worthington was able to more efficiently manage its inventory and collect cash from its sales, resulting in a shorter cash conversion cycle. This could be due to improved inventory management or more effective accounts receivable collection.
Comparing to previous years, in 2021 there was a noticeable increase in the cash conversion cycle to 73.50 days, which was higher than the 63.75 days in 2020 and 59.89 days in 2019. This increase may indicate that the company faced challenges in efficiently managing its working capital, potentially experiencing longer inventory turnover and slower collections from its customers.
Overall, Worthington Enterprises Inc. should continue to focus on effectively managing its working capital to maintain a shorter cash conversion cycle, contributing to improved liquidity and cash flow.
Peer comparison
May 31, 2023