Louisiana-Pacific Corporation (LPX)
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 | 69.40 | 52.21 | 51.98 | 60.37 | 48.19 |
| Days of sales outstanding (DSO) | days | 21.92 | 12.03 | 15.76 | 27.99 | 25.91 |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 91.32 | 64.24 | 67.74 | 88.36 | 74.11 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 69.40 + 21.92 – —
= 91.32
The cash conversion cycle of Louisiana-Pacific Corp. has varied over the past five years, ranging from a low of 34.87 days in 2021 to a high of 65.43 days in 2023. This metric measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
A shorter cash conversion cycle indicates that the company is able to efficiently manage its working capital, with quicker turnover of inventory and faster collection of receivables. On the other hand, a longer cycle suggests that the company may be facing challenges in managing its operating cycle effectively.
In 2021, Louisiana-Pacific Corp. had the shortest cash conversion cycle at 34.87 days, which could indicate a more streamlined and effective approach to managing its working capital. However, in 2023, the cycle increased to 65.43 days, which may raise concerns about the company's liquidity and operational efficiency during that period.
Overall, fluctuations in the cash conversion cycle should be carefully monitored by stakeholders as they can provide insights into the company's financial health, operational efficiency, and working capital management practices.
Peer comparison
Dec 31, 2023