Installed Building Products Inc (IBP)
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 | 36.49 | 32.16 | 35.00 | 37.86 | 24.64 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 36.49 | 32.16 | 35.00 | 37.86 | 24.64 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 36.49 + — – —
= 36.49
Installed Building Products Inc's cash conversion cycle has shown fluctuations over the past five years. In December 2020, the cash conversion cycle stood at 24.64 days, indicating that the company was able to efficiently convert its investments in inventory and accounts receivable back into cash within a relatively short period.
However, by December 2021, the cash conversion cycle had increased to 37.86 days, suggesting that the company took longer to convert its investments into cash. This longer cycle may indicate inefficiencies in managing inventory or collecting receivables, potentially tying up cash resources for a longer period.
In the following years, the cash conversion cycle remained elevated, at 35.00 days in December 2022, 32.16 days in December 2023, and 36.49 days in December 2024. These figures indicate that Installed Building Products Inc continued to face challenges in converting its operating assets into cash efficiently.
Overall, a longer cash conversion cycle can strain liquidity and working capital management. It is essential for the company to focus on improving inventory turnover, speeding up accounts receivable collection, and optimizing payment practices to shorten the cycle and enhance its cash flow management.
Peer comparison
Dec 31, 2024