Penn National Gaming Inc (PENN)

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	35.53	2.09	26.99	17.68	15.78
Days of sales outstanding (DSO)	days	18.30	14.05	12.05	9.83	6.11
Number of days of payables	days	5.76	7.56	10.88	5.67	8.29
Cash conversion cycle	days	48.06	8.58	28.17	21.84	13.59

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 35.53 + 18.30 – 5.76
= 48.06

The cash conversion cycle of PENN Entertainment Inc has exhibited a notable increasing trend over the past five years. The company's cash conversion cycle increased from 1.13 days in 2019 to 14.96 days in 2023. This indicates that the company is taking longer to convert its investments in inventory and accounts payable into cash from sales.

The trend suggests a potential inefficiency in managing the company's working capital and liquidity. A longer cash conversion cycle may imply that PENN Entertainment Inc is facing challenges in efficiently managing its inventory, collecting receivables, and paying suppliers. This could lead to increased financing costs and potential cash flow constraints.

Management should closely monitor and address the factors contributing to the elongation of the cash conversion cycle to improve the company's operational efficiency and overall financial health. Additionally, exploring strategies to streamline inventory management, enhance accounts receivable collection processes, and optimize payment terms with suppliers could help reduce the cash conversion cycle and enhance the company's cash flow management.