International Paper (IP)
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 | 45.31 | 42.96 | 42.13 | 36.81 | 46.88 |
| Days of sales outstanding (DSO) | days | 59.76 | 28.49 | 30.21 | 27.31 | 27.04 |
| Number of days of payables | days | 58.57 | 59.91 | 60.53 | 46.07 | 51.44 |
| Cash conversion cycle | days | 46.49 | 11.54 | 11.81 | 18.05 | 22.47 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 45.31 + 59.76 – 58.57
= 46.49
The cash conversion cycle for International Paper Co. has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 44.22 days compared to the previous year's 38.18 days. This indicates that International Paper took longer to convert its resources into cash during 2023. In comparison to 2021 and 2022, the cycle was shorter by approximately 4-6 days.
The cash conversion cycle is a comprehensive metric that reflects how efficiently a company manages its cash flows. A longer cycle suggests that the company takes more time to convert its investments in inventory, accounts receivable, and payables into cash, which can tie up capital and potentially hinder liquidity. Conversely, a shorter cycle implies better efficiency in managing working capital.
Overall, International Paper Co. should continue to monitor and potentially improve its cash conversion cycle to enhance its overall financial performance and ensure optimal management of its working capital.
Peer comparison
Dec 31, 2023