ODP Corp (ODP)
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 | 36.05 | 36.05 | 37.46 | 33.04 | 35.42 |
| Days of sales outstanding (DSO) | days | 22.75 | 23.08 | 21.41 | 23.84 | 49.01 |
| Number of days of payables | days | 35.58 | 35.74 | 41.43 | 33.15 | 35.22 |
| Cash conversion cycle | days | 23.23 | 23.38 | 17.44 | 23.73 | 49.21 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 36.05 + 22.75 – 35.58
= 23.23
ODP Corp's cash conversion cycle has shown fluctuations over the past five years. In 2023, it stood at 23.23 days, slightly lower than the previous year's figure of 23.38 days. However, this is still higher than the level observed in 2021 when the company had a cash conversion cycle of 17.44 days. In contrast, 2019 witnessed a significantly longer cash conversion cycle of 49.21 days.
The cash conversion cycle is a critical metric that reflects how efficiently a company manages its working capital. A shorter cycle indicates that the company is more adept at converting its investments in inventory and accounts receivable into cash, ultimately enhancing its liquidity position. On the other hand, a longer cash conversion cycle can suggest inefficiencies in managing working capital and potential challenges in cash flow generation.
Overall, while ODP Corp has experienced some variability in its cash conversion cycle over the years, it is essential for the company to continue monitoring and improving this metric to enhance operational efficiency and financial performance.
Peer comparison
Dec 31, 2023