Fastenal Company (FAST)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 95.35 | 112.58 | 115.75 | 108.10 | 116.48 |
| Days of sales outstanding (DSO) | days | 54.08 | 53.10 | 54.74 | 49.80 | 50.88 |
| Number of days of payables | days | 16.54 | 16.81 | 17.71 | 16.73 | 16.44 |
| Cash conversion cycle | days | 132.90 | 148.87 | 152.79 | 141.17 | 150.93 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 95.35 + 54.08 – 16.54
= 132.90
The cash conversion cycle for Fastenal Co. has shown fluctuations over the past five years, with the cycle decreasing from 202.76 days in 2019 to 169.11 days in 2023. This indicates an improvement in the efficiency of the company's working capital management over the years. A lower cash conversion cycle suggests that the company is able to convert its investments in inventory and receivables into cash more quickly.
However, it is worth noting that the cycle increased in 2022 compared to 2021 before decreasing in 2023. This could be due to changes in the company's operations or external factors affecting its cash flow and working capital management.
Overall, monitoring the cash conversion cycle is crucial for understanding how efficiently Fastenal Co. is managing its cash flow, inventory, and receivables. The trend of decreasing cycle over the years indicates that the company has been more effective in optimizing these aspects of its operations, which can positively impact its financial performance and liquidity.
Peer comparison
Dec 31, 2023