Builders FirstSource Inc (BLDR)

Cash conversion cycle

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	29.38	31.48	30.53	27.28	27.12	33.12	39.02	42.78	33.22	36.68	56.16	56.04	35.60	37.00	31.60	33.03	29.69	30.52	31.77	31.82
Days of sales outstanding (DSO)	days	36.88	39.41	36.78	27.50	27.06	34.86	42.36	42.94	36.10	47.22	57.89	61.58	40.81	43.40	37.38	37.20	34.73	38.34	37.59	33.47
Number of days of payables	days	21.08	24.40	23.80	19.17	15.28	20.49	23.91	30.57	22.34	22.79	35.69	39.72	27.24	32.09	28.48	28.46	23.11	26.21	26.59	23.60
Cash conversion cycle	days	45.17	46.49	43.51	35.61	38.91	47.49	57.47	55.15	46.98	61.11	78.36	77.90	49.17	48.32	40.50	41.76	41.31	42.65	42.76	41.69

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 29.38 + 36.88 – 21.08
= 45.17

The cash conversion cycle of Builders Firstsource Inc has exhibited some fluctuations over the past eight quarters. In Q1 2023, the company had a relatively shorter cash conversion cycle of 38.09 days, indicating a positive trend in managing working capital efficiently and converting inventory and receivables into cash quickly. However, this trend was not sustained in Q2 and Q3 2023, with the cash conversion cycle increasing to 45.81 and 49.05 days, respectively.

Comparing Q4 data across the years, the cash conversion cycle was 48.30 days in Q4 2023, higher than the 42.20 days in Q4 2022. This suggests a deterioration in the efficiency of managing cash flows and working capital compared to the same quarter the previous year.

Overall, the company's cash conversion cycle has shown some variability, with fluctuations in the efficiency of converting investments in inventory and receivables into cash. It is essential for Builders Firstsource Inc to monitor and manage its working capital effectively to improve its cash conversion cycle and maintain healthy liquidity levels.