PC Connection Inc (CNXN)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 12.77 | 16.44 | 25.25 | 26.85 | 20.32 |
| Days of sales outstanding (DSO) | days | 87.55 | 85.04 | 78.00 | 82.67 | 95.49 |
| Number of days of payables | days | 40.33 | 34.90 | 28.15 | 36.63 | 38.48 |
| Cash conversion cycle | days | 59.99 | 66.58 | 75.10 | 72.88 | 77.32 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 12.77 + 87.55 – 40.33
= 59.99
PC Connection Inc's cash conversion cycle has shown a positive trend of improvement over the years based on the provided data. The company's cash conversion cycle decreased from 77.32 days in December 2020 to 59.99 days in December 2024. This indicates that the company has been able to manage its working capital more efficiently, reducing the time it takes to convert inventory and accounts receivable into cash, thus enhancing liquidity.
A decreasing cash conversion cycle is generally seen as a positive sign, as it suggests that the company is collecting payments from customers faster and managing its inventory more effectively. This can lead to improved cash flow and overall financial health for the company. Additionally, a shorter cash conversion cycle can also reduce the need for external financing and decrease the company's reliance on costly short-term borrowing.
Overall, PC Connection Inc's improving cash conversion cycle reflects effective management of working capital and suggests positive operational efficiency in converting sales into cash. Continued focus on optimizing the cash conversion cycle can further enhance the company's financial performance and stability in the long run.
Peer comparison
Dec 31, 2024