Frontdoor Inc (FTDR)
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 | — | — | 11.16 | — | 8.50 |
| Days of sales outstanding (DSO) | days | 1.23 | 1.10 | 1.59 | 1.24 | 2.94 |
| Number of days of payables | days | 30.99 | 30.67 | 29.45 | 26.48 | 25.50 |
| Cash conversion cycle | days | -29.76 | -29.57 | -16.70 | -25.25 | -14.06 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 1.23 – 30.99
= -29.76
Frontdoor Inc.'s cash conversion cycle has been gradually decreasing over the past five years, indicating an improvement in efficiency in managing its cash flows. The company has been able to convert its invested cash into sales and back into cash at a quicker pace each year, as seen by the negative values in the cash conversion cycle.
In 2023, Frontdoor Inc. reported a cash conversion cycle of -29.76 days, which means the company is able to convert its investments in inventory and accounts receivable back into cash in less than a month. This is a slight increase compared to the previous year's cycle of -29.57 days but still reflects the company's ability to efficiently manage its working capital.
Looking back over the past five years, the trend shows a consistent improvement in the efficiency of Frontdoor Inc.'s cash conversion cycle. The company has been able to streamline its operations and collection efforts, resulting in a shorter cash conversion cycle each year.
Overall, Frontdoor Inc.'s cash conversion cycle analysis indicates that the company is effectively managing its working capital and operating efficiently in converting its investments into cash inflows.
Peer comparison
Dec 31, 2023