International Paper (IP)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 46.81 | 44.80 | 43.12 | 45.00 | 48.18 | 50.24 | 48.10 | 47.35 | 46.81 | 47.66 | 45.47 | 41.56 | 43.15 | 48.84 | 44.60 | 46.10 | 52.06 | 50.94 | 50.21 | 48.44 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 46.81 | 44.80 | 43.12 | 45.00 | 48.18 | 50.24 | 48.10 | 47.35 | 46.81 | 47.66 | 45.47 | 41.56 | 43.15 | 48.84 | 44.60 | 46.10 | 52.06 | 50.94 | 50.21 | 48.44 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 46.81 + — – —
= 46.81
The cash conversion cycle of International Paper has shown fluctuations over the period from March 31, 2020, to December 31, 2024. The company's cash conversion cycle, which represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has ranged from a low of 41.56 days on March 31, 2022, to a high of 52.06 days on December 31, 2020.
Generally, a lower cash conversion cycle indicates that the company is able to sell its inventory quickly and collect payments from customers promptly, which is a positive sign for the company's liquidity and operational efficiency. Conversely, a longer cash conversion cycle may suggest inefficiencies in inventory management or slower collection of receivables.
Analyzing the trend of International Paper's cash conversion cycle, we observe some improvement in the cycle duration from the beginning of 2023 to mid-2024, with the cycle decreasing from 50.24 days on September 30, 2023, to 43.12 days on June 30, 2024. This reduction could indicate enhancements in inventory management practices or more efficient collection of receivables during this period.
Overall, monitoring the cash conversion cycle is essential for assessing a company's liquidity and operational effectiveness. International Paper's management should continue to focus on optimizing its inventory levels and receivables collection process to further improve its cash conversion cycle and overall financial performance.
Peer comparison
Dec 31, 2024