Watsco Inc (WSO)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 90.41 | 106.04 | 105.14 | 113.31 | 92.93 | 107.73 | 119.14 | 111.74 | 95.37 | 97.30 | 107.84 | 104.75 | 88.27 | 86.74 | 89.75 | 92.04 | 75.61 | 85.62 | 85.00 | 93.60 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 90.41 | 106.04 | 105.14 | 113.31 | 92.93 | 107.73 | 119.14 | 111.74 | 95.37 | 97.30 | 107.84 | 104.75 | 88.27 | 86.74 | 89.75 | 92.04 | 75.61 | 85.62 | 85.00 | 93.60 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 90.41 + — – —
= 90.41
The cash conversion cycle of Watsco Inc has experienced fluctuations over the years, indicating changes in the company's efficiency in managing its working capital.
From March 31, 2020, to December 31, 2020, the cash conversion cycle decreased from 93.60 days to 75.61 days, reflecting a more efficient conversion of inventory to cash. However, there was a slight increase to 92.04 days by March 31, 2021, before decreasing again.
Throughout 2021 and 2022, the cash conversion cycle hovered between 85 and 107 days, showing some volatility in the company's ability to convert its resources into cash quickly.
In the latter part of 2023, and particularly in March 31, 2024, the cash conversion cycle spiked to 113.31 days, indicating potential issues in managing liquidity and working capital efficiently.
Overall, the trend in Watsco Inc's cash conversion cycle shows periods of improvement in managing working capital followed by fluctuations and challenges. It is important for the company to monitor and address these fluctuations to ensure optimal cash flow management and operational efficiency.