Watsco Inc (WSO)

Cash conversion cycle

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	92.93	107.73	119.14	111.74	95.37	97.30	107.84	104.75	88.27	86.74	89.75	92.04	74.42	85.62	85.00	93.60	93.01	99.97	102.05	95.15
Days of sales outstanding (DSO)	days	39.98	47.72	50.43	40.56	37.49	43.55	51.61	43.25	40.59	47.51	55.15	42.01	38.65	47.28	51.12	43.28	40.84	49.88	52.11	40.48
Number of days of payables	days	25.48	35.41	42.49	41.06	31.75	33.31	45.59	34.85	28.82	37.83	42.18	35.83	23.96	34.13	37.55	30.93	24.21	32.07	37.56	29.67
Cash conversion cycle	days	107.43	120.04	127.07	111.24	101.11	107.53	113.86	113.14	100.04	96.42	102.72	98.21	89.11	98.76	98.57	105.95	109.65	117.78	116.60	105.96

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 92.93 + 39.98 – 25.48
= 107.43

The cash conversion cycle for Watsco Inc. has shown fluctuations over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 107.43 days, indicating that it takes the company approximately 107 days to convert its investments in inventory and other resources into cash received from sales.

There was a decrease in the cash conversion cycle from Q4 2022 to Q1 2023, indicating a more efficient management of working capital during that period. However, the cycle increased in Q2 2023 and remained relatively high in Q3 2023 before decreasing again in Q4 2023.

Overall, the trend suggests some variability in the company's ability to manage its working capital efficiently. It is important for Watsco Inc. to monitor and improve its cash conversion cycle to ensure optimal utilization of resources and timely conversion of inventory into cash.