Olympic Steel Inc (ZEUS)
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 | 75.25 | 67.70 | 89.92 | 79.92 | 71.07 |
| Days of sales outstanding (DSO) | days | 32.33 | 31.31 | 44.80 | 44.91 | 30.87 |
| Number of days of payables | days | 23.31 | 16.47 | 27.56 | 29.07 | 18.04 |
| Cash conversion cycle | days | 84.28 | 82.54 | 107.16 | 95.76 | 83.89 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 75.25 + 32.33 – 23.31
= 84.28
The cash conversion cycle of Olympic Steel Inc. has shown fluctuating trends over the past five years. In 2023, the cash conversion cycle improved to 90.14 days from 86.86 days in 2022. This indicates that the company is managing its cash, accounts receivable, and inventory more efficiently in the most recent year.
Compared to the longer cycle of 113.05 days in 2021, the company has evidently made progress in converting its investments in raw materials and work-in-progress into cash during 2023. However, the company's cash conversion cycle in 2023 is still higher than the levels seen in 2020 (101.77 days) and 2019 (89.06 days), suggesting there is room for further optimization in the management of cash, accounts receivable, and inventory.
Overall, Olympic Steel Inc.'s cash conversion cycle has shown mixed performance over the years, and it is crucial for the company to continue monitoring and improving its working capital management to enhance efficiency and profitability.
Peer comparison
Dec 31, 2023