Forward Air Corporation (FWRD)

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	—	—	—	8.14	0.72
Days of sales outstanding (DSO)	days	43.32	41.16	47.76	44.99	45.11
Number of days of payables	days	33.84	32.31	32.64	14.88	8.53
Cash conversion cycle	days	9.47	8.85	15.12	38.26	37.30

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 43.32 – 33.84
= 9.47

The cash conversion cycle of Forward Air Corporation has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 9.47 days, showing an improvement compared to the previous year's cycle of 8.85 days. This indicates that the company is managing its cash flow more effectively and efficiently.

Looking back at 2021, there was a significant decrease in the cash conversion cycle from 38.26 days in 2020 to 15.12 days in 2021. This improvement suggests that the company implemented strategies to optimize its cash conversion cycle, resulting in a quicker conversion of inventory and receivables into cash.

Although there was a slight increase in the cash conversion cycle from 2019 to 2020, the company successfully reversed this trend and improved its cash conversion cycle in the subsequent years. Overall, the decreasing trend in the cash conversion cycle over the past few years indicates that Forward Air Corporation has been managing its working capital more efficiently, which is a positive sign for the company's financial health and operational effectiveness.