Hub Group Inc (HUBG)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	—	—	1.27	0.20	0.14
Days of sales outstanding (DSO)	days	51.28	49.47	46.43	58.86	53.61
Number of days of payables	days	122.74	158.50	25.83	38.83	30.72
Cash conversion cycle	days	-71.45	-109.03	21.87	20.22	23.03

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 51.28 – 122.74
= -71.45

The cash conversion cycle for Hub Group Inc has shown fluctuations over the past five years. As of December 31, 2020, the company's cash conversion cycle was 23.03 days, indicating that it took approximately 23 days for the company to convert its investment in inventory into cash receipts from customers.

By the end of December 31, 2021, the cash conversion cycle improved to 20.22 days, suggesting that the company was able to shorten the time it takes to convert inventory into cash. However, by December 31, 2022, the cash conversion cycle increased slightly to 21.87 days, which could indicate a potential slowdown in inventory turnover or collection of receivables.

Remarkably, by December 31, 2023, the cash conversion cycle significantly decreased to -109.03 days, indicating a negative conversion cycle, which implies that the company was able to convert its investments into cash much faster than it took to pay its suppliers for inventory. This negative cycle may signify efficient cash management and potentially favorable terms with suppliers.

As of December 31, 2024, the cash conversion cycle remained negative at -71.45 days, highlighting continued efficiency in converting inventory into cash, and a potential competitive advantage in managing working capital effectively.

Overall, the analysis of Hub Group Inc's cash conversion cycle demonstrates its ability to manage working capital efficiently, convert investments into cash effectively, and potentially leverage relationships with suppliers to optimize cash flows.