PC Connection Inc (CNXN)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 12.77 | 15.37 | 18.70 | 16.95 | 16.44 | 18.56 | 20.24 | 24.52 | 25.25 | 25.31 | 26.65 | 29.09 | 26.85 | 23.78 | 23.45 | 20.86 | 20.34 | 19.21 | 23.05 | 17.90 |
| Days of sales outstanding (DSO) | days | 87.41 | 77.31 | 80.34 | 70.18 | 85.04 | 75.25 | 73.97 | 74.08 | 78.00 | 73.93 | 74.18 | 76.04 | 82.67 | 77.19 | 79.53 | 80.49 | 95.49 | 81.70 | 60.21 | 61.28 |
| Number of days of payables | days | 40.33 | 39.63 | 43.41 | 29.94 | 34.90 | 34.51 | 35.14 | 29.41 | 28.15 | 30.68 | 33.25 | 33.66 | 36.63 | 29.43 | 36.23 | 30.66 | 38.53 | 40.39 | 34.37 | 28.74 |
| Cash conversion cycle | days | 59.85 | 53.04 | 55.64 | 57.19 | 66.57 | 59.29 | 59.08 | 69.19 | 75.10 | 68.56 | 67.58 | 71.47 | 72.88 | 71.53 | 66.75 | 70.69 | 77.29 | 60.52 | 48.89 | 50.44 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 12.77 + 87.41 – 40.33
= 59.85
The cash conversion cycle is a key metric that measures how long it takes for a company to convert its investments in inventory and other resources into cash flow from sales. It comprises three key components: days inventory outstanding (DIO), days sales outstanding (DSO), and days payable outstanding (DPO). A shorter cash conversion cycle is generally preferable, as it indicates that the company is able to quickly convert its investments into cash.
Analyzing the data provided for PC Connection Inc, we can observe fluctuations in the cash conversion cycle over the periods from March 31, 2020, to December 31, 2024. The cash conversion cycle ranged from a low of 48.89 days (June 30, 2020) to a high of 77.29 days (December 31, 2020).
During the initial periods, the cash conversion cycle showed some volatility, likely due to changes in the company's inventory management practices, sales strategies, and payment terms with suppliers and customers. However, it generally trended downwards from 2021 to 2024, indicating an improvement in efficiency in converting resources into cash.
A decreasing trend in the cash conversion cycle suggests that PC Connection Inc may have been managing its inventory more efficiently, collecting receivables faster, or extending payment terms to suppliers. These actions can help enhance liquidity, reduce working capital requirements, and improve overall cash flow management.
Overall, monitoring the cash conversion cycle can provide valuable insights into a company's operational efficiency and financial health. A decreasing or stable cash conversion cycle is generally considered a positive sign, indicating effective working capital management and potentially improved profitability. However, it is essential to consider industry norms and compare the company's performance with its peers to derive meaningful conclusions about its operational effectiveness.
Peer comparison
Dec 31, 2024