Advance Auto Parts Inc (AAP)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Oct 7, 2023 | Sep 30, 2023 | Jul 15, 2023 | Jun 30, 2023 | Apr 22, 2023 | Mar 31, 2023 | Dec 31, 2022 | Oct 8, 2022 | Sep 30, 2022 | Jun 30, 2022 | Apr 23, 2022 | Mar 31, 2022 | Dec 31, 2021 | Oct 9, 2021 | Sep 30, 2021 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 204.88 | 234.19 | 228.60 | 220.48 | 206.78 | 208.82 | 197.10 | 196.59 | 225.41 | 199.61 | 251.85 | 262.58 | 209.03 | 224.73 | 224.16 | 198.65 | 247.80 | 224.51 | 210.69 | 193.42 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | 29.32 | — | 23.73 | — | 23.89 | — | — | 27.28 | — | — | 29.73 | — | — | 32.26 | — |
| Number of days of payables | days | — | — | — | — | — | 170.39 | — | 150.30 | — | 149.88 | — | — | 173.14 | — | — | 163.88 | — | — | 177.57 | — |
| Cash conversion cycle | days | 204.88 | 234.19 | 228.60 | 220.48 | 206.78 | 67.74 | 197.10 | 70.02 | 225.41 | 73.63 | 251.85 | 262.58 | 63.16 | 224.73 | 224.16 | 64.50 | 247.80 | 224.51 | 65.38 | 193.42 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 204.88 + — – —
= 204.88
The cash conversion cycle measures how quickly a company can convert its investments in inventory into cash flow from sales. For Advance Auto Parts Inc, the trend in the cash conversion cycle from September 2021 to December 2024 fluctuates significantly.
The company experienced fluctuations in its cash conversion cycle, ranging from a low of 63.16 days to a high of 262.58 days over the period analyzed. A shorter cash conversion cycle indicates that the company efficiently manages its inventory, collects receivables promptly, and pays its liabilities at a slower rate.
Advance Auto Parts Inc saw a notable decrease in its cash conversion cycle from December 2022 to April 2023, suggesting an improvement in managing its working capital and liquidity. However, the cycle increased again by December 2023 before slightly improving by December 2024.
Analyzing the cash conversion cycle can provide insights into the company's operational efficiency, working capital management, and overall financial health. It is crucial for investors and analysts to monitor changes in the cash conversion cycle over time to assess the company's ability to generate cash and maintain liquidity.
Peer comparison
Dec 31, 2024