Xylem Inc (XYL)
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 | 79.96 | 84.83 | 79.35 | 66.86 | 61.42 |
| Days of sales outstanding (DSO) | days | 80.15 | 72.44 | 66.96 | 69.09 | 72.04 |
| Number of days of payables | days | 76.03 | 76.76 | 72.43 | 68.18 | 68.03 |
| Cash conversion cycle | days | 84.07 | 80.51 | 73.87 | 67.77 | 65.43 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 79.96 + 80.15 – 76.03
= 84.07
The cash conversion cycle of Xylem Inc has exhibited an increasing trend over the past five years, indicating a lengthening period required to convert its resources into cash. This could suggest potential inefficiencies in the company's management of its cash, inventory, and accounts receivable. The cycle increased from 65.43 days in 2019 to 84.07 days in 2023, indicating a steady deterioration in the company's ability to efficiently convert its resources into cash.
The increase in the cash conversion cycle could be attributed to various factors such as slower collection of accounts receivable, higher inventory holding periods, or delayed payments to suppliers. It is essential for Xylem Inc to closely monitor and manage its cash conversion cycle to ensure optimal liquidity and operational efficiency.
Overall, the deteriorating trend in Xylem Inc's cash conversion cycle warrants further investigation and potential operational improvements to enhance the company's financial performance and efficiency in managing its working capital.
Peer comparison
Dec 31, 2023