ODP Corp (ODP)
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 | 72.41 | 75.31 | 77.19 | 71.05 | 48.70 | 52.38 | 57.11 | 48.23 | 46.33 | 45.32 | 48.98 | 45.92 | 43.31 | 47.29 | 46.11 | 42.73 | 46.87 | 46.41 | 49.71 | 46.26 |
| Days of sales outstanding (DSO) | days | 22.73 | 24.36 | 22.72 | — | 23.07 | 25.63 | 24.54 | 24.09 | 20.41 | 19.34 | 26.28 | 26.92 | 23.83 | 24.41 | 24.51 | 29.43 | 48.92 | 59.34 | 30.39 | 31.74 |
| Number of days of payables | days | 71.47 | 78.78 | 79.78 | — | 48.29 | 50.20 | 54.10 | 54.30 | 51.23 | 46.50 | 50.10 | 47.40 | 43.45 | 49.09 | 45.47 | 46.27 | 46.60 | 46.95 | 48.64 | 49.13 |
| Cash conversion cycle | days | 23.67 | 20.89 | 20.14 | 71.05 | 23.48 | 27.81 | 27.55 | 18.02 | 15.50 | 18.15 | 25.15 | 25.44 | 23.69 | 22.62 | 25.15 | 25.89 | 49.19 | 58.80 | 31.46 | 28.88 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 72.41 + 22.73 – 71.47
= 23.67
The cash conversion cycle for ODP Corp has fluctuated over the past few quarters. It represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
Looking at the trend, the cash conversion cycle has shown some variability, with fluctuations between shorter and longer cycles. For example, in March 2020, the cash conversion cycle was 25.89 days, indicating that the company took almost a month to convert its investments into cash. This was followed by an improvement in efficiency, with the cycle decreasing to 23.67 days by the end of December 2023.
The longer cash conversion cycles observed in March 2023 and September 2019 could suggest delays in collecting revenue from sales or managing inventory levels effectively. Conversely, the shorter cycles in March 2021 and December 2020 indicate potential improvements in working capital management, leading to quicker conversion of assets into cash.
Overall, ODP Corp should continue monitoring its cash conversion cycle to ensure efficient management of working capital, optimize inventory levels, and streamline sales collection processes to enhance its cash flow generation.
Peer comparison
Dec 31, 2023