Woodward Inc (WWD)
Cash conversion cycle
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 79.60 | 73.90 | 89.52 | 79.37 | 73.56 |
| Days of sales outstanding (DSO) | days | 52.45 | 63.61 | 57.99 | 55.09 | 57.18 |
| Number of days of payables | days | 37.57 | 33.44 | 40.12 | 32.30 | 22.55 |
| Cash conversion cycle | days | 94.49 | 104.07 | 107.39 | 102.16 | 108.19 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 79.60 + 52.45 – 37.57
= 94.49
The cash conversion cycle of Woodward Inc has shown a decreasing trend over the past five years, indicating an improvement in its efficiency in managing cash flow from operations. In the most recent fiscal year ending September 30, 2024, the cash conversion cycle stood at 94.49 days, down from 104.07 days in the previous year. This suggests that Woodward Inc has been able to collect cash from its operating activities, convert inventory into sales, and pay its suppliers at a faster pace compared to previous years.
The decrease in the cash conversion cycle reflects a more efficient management of working capital, which is crucial for the company's liquidity and overall financial health. It indicates that Woodward Inc is able to convert its investments in inventory into sales and ultimately into cash more quickly. This can lead to improved cash flow, reduced reliance on external financing, and better profitability.
Overall, the downward trend in Woodward Inc's cash conversion cycle signals effective management of its working capital and suggests a positive outlook for the company's liquidity position and operational efficiency.