Deluxe Corporation (DLX)
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 | 13.36 | 14.45 | 13.76 | 13.71 | 14.92 | 17.32 | 19.28 | 19.04 | 18.48 | 16.12 | 13.52 | 13.20 | 14.42 | 15.71 | 16.16 | 19.16 | 20.04 | 24.45 | 22.15 | 18.92 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 13.36 | 14.45 | 13.76 | 13.71 | 14.92 | 17.32 | 19.28 | 19.04 | 18.48 | 16.12 | 13.52 | 13.20 | 14.42 | 15.71 | 16.16 | 19.16 | 20.04 | 24.45 | 22.15 | 18.92 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 13.36 + — – —
= 13.36
The cash conversion cycle is a key metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Looking at Deluxe Corporation's cash conversion cycle data from March 31, 2020, to December 31, 2024, we observe fluctuations over time.
Initially, the cash conversion cycle was around 18-24 days, indicating that Deluxe Corporation was efficient in managing its working capital. However, there was a gradual decline in the cash conversion cycle from March 31, 2021, to December 31, 2024, where it reduced to as low as 13.36 days by the end of December 31, 2024. Decreasing days in the cash conversion cycle could imply that the company was managing its inventory, accounts receivable, and accounts payable more efficiently.
The decreasing trend in the cash conversion cycle suggests that Deluxe Corporation was able to generate cash from its operations at a faster rate. This improvement in the cash conversion cycle could indicate effective management of working capital and a more streamlined approach to operations. Furthermore, a lower cash conversion cycle generally signifies improved liquidity and financial stability for the company.
Overall, Deluxe Corporation's decreasing cash conversion cycle over the analyzed period may imply that the company was becoming more efficient in managing its working capital and generating cash, which is a positive indicator of financial health and operational efficiency.