Worthington Industries Inc (WOR)
Cash conversion cycle
| Nov 30, 2024 | Aug 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 75.00 | 74.66 | 41.03 | 121.68 | 95.71 | 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 |
| Days of sales outstanding (DSO) | days | 61.88 | 53.39 | 37.55 | 107.95 | 83.53 | 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 |
| Number of days of payables | days | 34.80 | 32.99 | 23.26 | 94.38 | 74.98 | 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 |
| Cash conversion cycle | days | 102.08 | 95.05 | 55.33 | 135.25 | 104.26 | 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 |
November 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 75.00 + 61.88 – 34.80
= 102.08
The cash conversion cycle for Worthington Industries Inc has demonstrated fluctuations over the past few years. In general terms, the company's cash conversion cycle measures the time it takes for the company to convert its investments in inventory into cash, which includes the time taken to sell inventory, collect receivables, and pay suppliers.
From November 2019 to February 2024, the cash conversion cycle varied, ranging from a low of 52.64 days in November 2020 to a peak of 135.25 days in November 2023. A lower number of days indicates a more efficient cash conversion cycle, while a higher number signifies a longer period that the company takes to convert its working capital into cash.
In analyzing Worthington Industries' cash conversion cycle trend, it indicates that the company may have experienced challenges in managing its working capital efficiently during certain periods. A prolonged cash conversion cycle can tie up the company's cash flow, potentially indicating issues with inventory management, credit policies, or payment processes.
The company should strive to optimize its cash conversion cycle by streamlining operations, improving inventory turnover, enhancing accounts receivable collection processes, and negotiating favorable payment terms with suppliers. A more efficient cash conversion cycle not only improves liquidity but also indicates effective management of working capital, contributing to overall financial health and sustainability.
Peer comparison
Nov 30, 2024