Old Dominion Freight Line Inc (ODFL)

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	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	33.12	35.44	36.86	37.35	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
Number of days of payables	days	9.95	10.72	12.23	10.76	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
Cash conversion cycle	days	23.17	24.72	24.63	26.59	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

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 33.12 – 9.95
= 23.17

The cash conversion cycle of Old Dominion Freight Line Inc has shown fluctuating trends over the past few years. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to December 31, 2024, the cash conversion cycle has ranged from 20.76 days to 35.74 days, indicating variations in the efficiency of Old Dominion Freight Line's operations in managing its working capital. A lower number of days signifies a shorter cash conversion cycle, which is generally preferable as it indicates that the company is able to convert its investments into cash more quickly.

The trend shows that the cash conversion cycle fluctuated during the observed period, with some quarters showing improvements and others showing increases in the number of days required to convert investments into cash. Notably, there was a downward trend in the cash conversion cycle from March 31, 2023, to December 31, 2024, suggesting improved efficiency in managing working capital.

Overall, a decreasing trend in the cash conversion cycle indicates that Old Dominion Freight Line Inc has been able to manage its working capital more efficiently, potentially resulting in improved liquidity and financial performance over the period under review. However, it is essential for the company to continue monitoring and optimizing its cash conversion cycle to ensure effective utilization of resources and maintain healthy liquidity levels.