PACCAR Inc (PCAR)
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 | 970.58 | 1,025.47 | 1,097.06 | 1,084.69 | 961.84 | 1,035.20 | 962.16 | 922.82 | 761.61 | 925.72 | 715.04 | 504.45 | 405.52 | 368.64 | 370.84 | 407.73 | 380.82 | 425.62 | 447.95 | 423.77 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 970.58 | 1,025.47 | 1,097.06 | 1,084.69 | 961.84 | 1,035.20 | 962.16 | 922.82 | 761.61 | 925.72 | 715.04 | 504.45 | 405.52 | 368.64 | 370.84 | 407.73 | 380.82 | 425.62 | 447.95 | 423.77 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 970.58 + — – —
= 970.58
To analyze Paccar Inc.'s cash conversion cycle, we can observe fluctuations in the cycle over the past eight quarters. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales.
Looking at the data provided, there is a noticeable trend of improvement in Paccar Inc.'s cash conversion cycle over the recent quarters. The cycle has decreased from a high of 260.16 days in Q1 2022 to 217.75 days in Q4 2023. This indicates that the company has been more efficient in managing its working capital and converting investments into cash.
Over the last two quarters of 2023, the cash conversion cycle has decreased, signaling that Paccar Inc. has been managing its inventory, accounts receivable, and accounts payable more effectively. The company's ability to reduce the time it takes to convert resources into cash suggests improved operational efficiency and potentially enhanced liquidity.
Although some fluctuations are visible in the data, the downward trend in the cash conversion cycle is a positive indicator for Paccar Inc., demonstrating improved working capital management and potentially leading to increased cash flows and overall financial health. It will be essential for the company to sustain and further optimize its cash conversion cycle to support its long-term financial performance and growth prospects.
Peer comparison
Dec 31, 2023