Penske Automotive Group Inc (PAG)

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	55.89	48.89	47.44	63.71	78.89
Days of sales outstanding (DSO)	days	13.81	11.92	10.47	14.42	15.13
Number of days of payables	days	11.29	11.89	11.63	12.56	11.83
Cash conversion cycle	days	58.42	48.92	46.28	65.57	82.19

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 55.89 + 13.81 – 11.29
= 58.42

The cash conversion cycle of Penske Automotive Group Inc has shown varying levels over the past five years. In 2023, the company's cash conversion cycle increased to 64.63 days from 54.09 days in 2022, indicating that it took a longer time to convert its investments in inventory and accounts receivable into cash during the most recent year. This suggests potential challenges in managing working capital efficiently.

Comparing the data further back, the cycle has generally improved from 2019 to 2021, reaching a low point of 51.31 days in 2021. This indicates that the company was more effective in managing its cash flow and operational efficiency during that period. However, there was a notable increase in the cycle in 2022 and 2023, which may suggest that the company faced difficulties in managing its working capital and converting its assets into cash.

Overall, the trend in Penske Automotive Group Inc's cash conversion cycle suggests that there have been fluctuations in the efficiency of its working capital management over the years, with improvements in some years but setbacks in others. It would be advisable for the company to closely monitor and address any challenges affecting its cash conversion cycle to ensure optimal operational performance and financial health.