Worthington Steel Inc (WS)
Cash conversion cycle
| May 31, 2025 | May 31, 2024 | Aug 31, 2023 | May 31, 2023 | Aug 31, 2022 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 56.95 | 49.46 | 46.28 | 46.28 | 56.59 |
| Days of sales outstanding (DSO) | days | 51.78 | 50.73 | — | 47.08 | — |
| Number of days of payables | days | 54.32 | 46.42 | — | 43.80 | — |
| Cash conversion cycle | days | 54.41 | 53.77 | 46.28 | 49.56 | 56.59 |
May 31, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 56.95 + 51.78 – 54.32
= 54.41
The analysis of Worthington Steel Inc's cash conversion cycle (CCC) over the specified periods indicates a generally positive trend, with notable variations across the timeline. As of August 31, 2022, the CCC stood at approximately 56.59 days. This figure decreased to around 49.56 days by May 31, 2023, reflecting an improvement in the company's efficiency in managing its working capital components—such as inventory turnover, accounts receivable collection, and accounts payable deferral.
Continuing this trend, the CCC further contracted to approximately 46.28 days by August 31, 2023, suggesting an ongoing enhancement in operational efficiency. This decline indicates that the company was able to convert its investments in inventory into cash more rapidly, thereby reducing the time it takes to cycle through its operating assets and liabilities.
However, this positive momentum experienced a partial reversal by May 31, 2024, when the CCC increased to roughly 53.77 days, and further to approximately 54.41 days by May 31, 2025. These increases imply a slight deterioration in the company's operational cycle, potentially due to longer inventory holding periods, delayed receivables collection, or a change in payment terms with suppliers. The rise in CCC during these periods suggests that the company might have faced challenges in maintaining its earlier efficiencies, which could impact cash flow and liquidity position if persistent.
Overall, the trend from August 2022 through August 2023 shows significant improvements in the cash conversion cycle, indicating better management of working capital and operational efficiencies. Conversely, the subsequent increase in the cycle from mid-2023 onwards warrants further scrutiny to determine underlying causes and assess potential impacts on financial health and liquidity management strategies.
Peer comparison
May 31, 2025