Watts Water Technologies Inc (WTS)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 84.67 | 81.57 | 85.38 | 71.68 | 69.42 |
| Days of sales outstanding (DSO) | days | 46.29 | 43.26 | 44.72 | 48.25 | 50.57 |
| Number of days of payables | days | 27.95 | 29.17 | 33.03 | 29.94 | 31.69 |
| Cash conversion cycle | days | 103.01 | 95.67 | 97.07 | 89.99 | 88.30 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 84.67 + 46.29 – 27.95
= 103.01
The cash conversion cycle of Watts Water Technologies, Inc. has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 135.25 days from 122.80 days in 2022. This suggests that the company took longer to convert its investments in inventory and other resources into cash during 2023.
Comparing the trend over the five-year period, there was a general increase in the cash conversion cycle from 108.18 days in 2019 to 135.25 days in 2023. This indicates that the efficiency of the company in managing its cash flow and working capital may have declined over the years.
The cash conversion cycle is an important metric for assessing a company's liquidity and operational efficiency. A longer cash conversion cycle may indicate inefficiencies in managing inventory, receivables, and payables, which can tie up cash and impact the company's overall financial health. Watts Water Technologies, Inc. may need to focus on improving its working capital management practices to reduce the cash conversion cycle and enhance its liquidity position.
Peer comparison
Dec 31, 2023