GXO Logistics Inc (GXO)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | — |
| Days of sales outstanding (DSO) | days | 65.79 | 67.06 | 90.43 |
| Number of days of payables | days | 28.23 | 30.12 | 29.62 |
| Cash conversion cycle | days | 37.56 | 36.95 | 60.81 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 65.79 – 28.23
= 37.56
The cash conversion cycle of GXO Logistics Inc has shown a decreasing trend over the past four years, indicating an improvement in the efficiency of its cash management and working capital utilization. In 2020, the company's cash conversion cycle was 75.55 days, which decreased to 69.28 days in 2021, further decreasing to 66.85 days in 2022, and finally reaching 65.44 days in 2023.
A lower cash conversion cycle implies that GXO Logistics is taking less time to convert its investments in inventory and accounts receivable into cash from sales. This could suggest that the company is managing its inventory levels effectively, collecting payments from customers promptly, and optimizing its cash flow generation process. Overall, the declining trend in the cash conversion cycle reflects an enhancement in the company's working capital efficiency and liquidity management.
Peer comparison
Dec 31, 2023