Old Dominion Freight Line Inc (ODFL)

Cash conversion cycle

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	38.16	41.29	34.86	34.08	35.27	38.61	42.83	44.19	41.60	48.54	47.86	44.44	41.30	42.77	36.65	38.02	—	38.75	40.43	40.45
Number of days of payables	days	12.52	13.05	10.92	13.32	11.76	13.31	15.27	13.62	10.00	17.15	12.12	12.51	9.79	8.39	7.23	7.57	9.66	11.45	12.02	11.27
Cash conversion cycle	days	25.64	28.24	23.94	20.76	23.51	25.30	27.56	30.56	31.60	31.39	35.74	31.93	31.51	34.38	29.42	30.45	-9.66	27.30	28.41	29.17

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 38.16 – 12.52
= 25.64

The cash conversion cycle of Old Dominion Freight Line, Inc. has shown some fluctuations over the past eight quarters. Generally, the company's cash conversion cycle indicates the number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales. In Q4 2023, the cash conversion cycle was the lowest at 34.11 days, indicating that the company efficiently managed its working capital and turned its inventory and receivables into cash relatively quickly.

Compared to the same quarter in the previous year, the company improved its cash conversion cycle by 1.17 days, reflecting better efficiency in managing its cash flows. In the most recent quarters, Old Dominion Freight Line, Inc. has been able to reduce the number of days in the cash conversion cycle, signaling improved operational efficiency and possibly more effective working capital management practices.

It is important to note that Q2 2022 and Q1 2022 had notably higher cash conversion cycles compared to the latest quarters, indicating potential challenges in managing working capital and converting assets into cash during those periods. Overall, closely monitoring the cash conversion cycle can provide insights into the company's liquidity management and operational effectiveness.