Quanex Building Products (NX)

Days Sales Outstanding (DSO) measures the average number of days it takes for a company to collect payment after making a sale, indicating its efficiency in managing accounts receivable. A lower DSO is generally favorable as it suggests faster collection of sales, improving cash flow and reducing the risk of bad debts.

Analyzing the DSO trend for Quanex Building Products Corp over the past five years, we observe fluctuations in the efficiency of its accounts receivable management.

In 2019, the DSO was 33.87 days, indicating that, on average, it took the company approximately 33.87 days to collect payment after making a sale. This decreased to 28.69 days in 2022, reflecting improved collections efficiency. The company demonstrated further improvement in 2023, with the DSO declining to 34.10 days. This indicates that Quanex Building Products Corp was able to collect payments more quickly than in 2019, though there was a slight increase from the previous year.

In 2021 and 2020, however, the DSO increased to 36.87 days and 37.84 days, respectively, suggesting a slower collection of sales compared to the previous years. This increase could potentially indicate challenges in accounts receivable management during these periods, possibly leading to reduced cash flow efficiency.

In conclusion, while the company has exhibited periods of improved efficiency in collecting sales, as indicated by lower DSO figures, the instances of increasing DSO highlight potential challenges in managing accounts receivable. Further analysis of the company's collection policies and customer credit practices would be beneficial in understanding the factors influencing these fluctuations in DSO.

Peer comparison

Oct 31, 2023