Installed Building Products Inc (IBP)
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 | 24.51 | 27.41 | 29.09 | 18.65 | 19.33 |
| Days of sales outstanding (DSO) | days | 108.68 | 109.07 | 117.84 | 118.43 | 102.73 |
| Number of days of payables | days | 23.87 | 23.15 | 26.99 | 24.51 | 25.62 |
| Cash conversion cycle | days | 109.31 | 113.32 | 119.94 | 112.56 | 96.44 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 24.51 + 108.68 – 23.87
= 109.31
Installed Building Products Inc's cash conversion cycle has shown fluctuations over the past five years. In 2023, the cash conversion cycle decreased to 56.43 days from 59.74 days in 2022. This indicates an improvement in the company's efficiency in converting its investments in inventory and receivables to cash.
While the cycle increased slightly in 2022 and 2021 compared to the previous years, the trend has been relatively stable over the period. A longer cash conversion cycle may indicate that the company is taking longer to collect cash from customers or is holding onto inventory for an extended period before selling it.
Overall, the company's management should continue to monitor and optimize the components of the cash conversion cycle, including accounts receivable and inventory turnover, to ensure efficient cash flow management and working capital utilization.
Peer comparison
Dec 31, 2023