Forward Air Corporation (FWRD)

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	—	—	—	—	—	—	—	—	—	—	—	—	7.74	10.49	5.50	—	0.72	—	—	—
Days of sales outstanding (DSO)	days	36.86	40.90	35.50	38.21	41.04	46.46	48.39	49.04	47.65	48.39	52.26	51.44	44.99	45.10	39.10	42.10	45.11	45.91	44.47	42.38
Number of days of payables	days	34.28	29.87	24.26	28.37	33.13	34.44	29.43	38.96	33.36	14.75	15.65	15.31	14.15	20.20	12.83	9.94	8.54	11.70	11.11	11.30
Cash conversion cycle	days	2.58	11.03	11.24	9.85	7.91	12.02	18.97	10.08	14.29	33.64	36.61	36.13	38.59	35.39	31.77	32.16	37.29	34.22	33.37	31.08

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 36.86 – 34.28
= 2.58

The cash conversion cycle of Forward Air Corporation has shown fluctuations over the past few quarters. The company's cash conversion cycle represents the time taken to convert its investments in inventory and accounts receivable into cash flows from sales.

Analyzing the data provided, we observe that in the most recent quarter, ending December 31, 2023, the cash conversion cycle improved to 2.58 days compared to the previous quarter where it stood at 11.03 days. This indicates that the company was able to manage its inventory and collect its receivables more efficiently in the last quarter.

Looking back over the past year, the trend of the cash conversion cycle for Forward Air Corporation has shown some volatility. While there were periods of longer cash conversion cycles, such as in the third quarter of 2021 with 36.61 days, the company has managed to improve its efficiency in converting assets into cash in more recent quarters.

Overall, the downward trend in the cash conversion cycle in the recent quarters suggests that Forward Air Corporation is becoming more efficient in managing its working capital and converting its operational activities into cash flows. It implies that the company is managing its inventory and accounts receivable effectively, which could lead to improved liquidity and profitability in the future.