Worthington Industries Inc (WOR)
Cash conversion cycle
| Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 21.96 | 65.53 | 73.97 | 19.94 | 55.84 | 48.80 | 54.44 | 61.20 | 80.79 | 93.23 | 95.61 | 81.40 | 65.52 | 47.18 | 47.27 | 56.53 | 47.32 | 45.56 | 48.56 | 53.90 |
| Days of sales outstanding (DSO) | days | 21.16 | 61.19 | 64.86 | 61.17 | 59.99 | 47.57 | 54.07 | 61.14 | 66.74 | 66.03 | 73.25 | 73.88 | 68.86 | 57.83 | 53.43 | 41.69 | 52.16 | 51.13 | 48.36 | 49.79 |
| Number of days of payables | days | 12.44 | 50.83 | 57.95 | 12.99 | 45.46 | 35.87 | 43.46 | 53.89 | 67.13 | 67.77 | 84.14 | 81.78 | 65.45 | 52.37 | 43.53 | 34.47 | 45.37 | 39.70 | 40.42 | 43.80 |
| Cash conversion cycle | days | 30.67 | 75.89 | 80.88 | 68.12 | 70.37 | 60.49 | 65.05 | 68.45 | 80.39 | 91.50 | 84.72 | 73.50 | 68.92 | 52.64 | 57.18 | 63.75 | 54.11 | 56.98 | 56.51 | 59.89 |
February 29, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 21.96 + 21.16 – 12.44
= 30.67
The cash conversion cycle of Worthington Industries Inc has exhibited fluctuations over the past several periods. The company's cash conversion cycle represents the time it takes for the company to convert its investments in inventory and accounts receivable into cash inflows from customers. A shorter cash conversion cycle is generally preferred as it indicates a more efficient use of resources and quicker cash inflows.
From the data provided, we observe that the cash conversion cycle has varied significantly, ranging from 30.67 days to 91.50 days over the last 20 periods. The cycle peaked at 91.50 days in November 2021 and reached its lowest point at 30.67 days in February 2024. This variation suggests fluctuations in the company's inventory turnover, accounts receivable collection, and accounts payable management.
The longest cash conversion cycles may indicate inefficiencies in managing inventory, slow collection of accounts receivable, or lenient payment terms to suppliers. Conversely, the shorter cycles imply improved efficiency in managing working capital and faster conversion of investments into cash.
It is important for Worthington Industries Inc to closely monitor its cash conversion cycle to ensure optimal working capital management. By continuously analyzing and improving the various components of the cycle, such as inventory management, receivables collection, and payables terms, the company can strive to enhance cash flow efficiency and overall financial performance.
Peer comparison
Feb 29, 2024