Deluxe Corporation (DLX)

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	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	24.72	22.38	19.11	17.92	18.76	20.65	20.49
Days of sales outstanding (DSO)	days	39.24	43.11	43.77	45.43	41.01	40.34	39.48	40.24	44.53	39.42	41.46	33.57	37.77	27.17	26.77	29.02	29.69	25.92	27.73	28.55
Number of days of payables	days	54.90	57.33	61.33	55.82	55.54	52.89	53.34	55.91	63.18	61.49	66.69	56.29	58.43	55.36	48.80	48.47	50.38	43.38	42.73	41.74
Cash conversion cycle	days	-0.74	3.10	1.71	8.65	3.96	3.57	-0.34	-2.47	-4.24	-6.36	-9.07	-3.56	-0.62	-3.47	0.35	-0.35	-2.76	1.30	5.64	7.30

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 14.92 + 39.24 – 54.90
= -0.74

The cash conversion cycle of Deluxe Corp. has been fluctuating over the past eight quarters. In Q4 2023, the company reported a negative cash conversion cycle of -3.83 days, indicating that it was able to convert its inventory and receivables into cash quicker than paying its payables during that period. This represents an improvement from the previous quarter's figure of -0.42 days.

In Q3 2023, the cash conversion cycle was also negative at -0.42 days, showing that the company was efficient in managing its working capital. However, in Q2 2023 and Q1 2023, the company had a slightly longer cash conversion cycle of -1.33 days and 5.47 days, respectively, indicating that it took longer to convert its inventory and receivables into cash.

Comparing these figures to the same quarters in the previous year, we see that there have been improvements in the cash conversion cycle. In Q4 2022, the cash conversion cycle was 2.96 days, while in Q3 2022 and Q2 2022, it was 1.20 days and -3.17 days, respectively. Q1 2022 had the longest cash conversion cycle of -5.47 days, indicating that the company took more time to convert its working capital into cash during that period.

Overall, Deluxe Corp. has shown a mix of positive and negative cash conversion cycles over the past eight quarters, with some periods being more efficient in managing its working capital than others. As an analyst, it would be important to monitor these trends closely to assess the company's effectiveness in managing its cash flow.