Hub Group Inc (HUBG)

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	—	1.27	0.20	0.14	0.07
Days of sales outstanding (DSO)	days	49.47	46.43	58.86	53.61	44.58
Number of days of payables	days	158.50	25.83	38.83	30.72	26.71
Cash conversion cycle	days	-109.03	21.87	20.22	23.03	17.93

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 49.47 – 158.50
= -109.03

The cash conversion cycle for Hub Group, Inc. has shown fluctuations over the five-year period, ranging from a high of 54.32 days in 2020 to a low of 10.20 days in 2023. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales. A shorter cash conversion cycle indicates faster turnover of inventory and quicker realization of cash from sales, which is generally considered favorable for a company's liquidity and efficiency.

In 2020, the company had a relatively high cash conversion cycle of 54.32 days, indicating that it took longer for Hub Group, Inc. to convert its investments in inventory into cash generated from sales. However, in the following years, the company managed to significantly improve its cash conversion cycle, with the cycle dropping to 44.46 days in 2019, 16.81 days in 2021, and further down to 10.20 days in 2023. This trend suggests that Hub Group, Inc. has been more efficient in managing its inventory, collecting receivables, and paying its suppliers in a timely manner, leading to faster cash conversion.

Overall, the decreasing trend in the cash conversion cycle over the years reflects Hub Group, Inc.'s efforts to enhance its operational efficiency and financial performance by optimizing its working capital management. This improvement bodes well for the company's liquidity position and indicates a potential enhancement in its overall financial health.