Performance Food Group Co (PFGC)
Cash conversion cycle
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 24.05 | 27.20 | 24.62 | 25.14 | 28.29 |
| Days of sales outstanding (DSO) | days | 15.62 | 16.85 | 19.67 | 20.69 | 22.76 |
| Number of days of payables | days | — | — | — | 26.09 | 23.58 |
| Cash conversion cycle | days | 39.67 | 44.05 | 44.29 | 19.73 | 27.48 |
June 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 24.05 + 15.62 – —
= 39.67
Performance Food Group Co's cash conversion cycle has shown some fluctuation over the past five years. In the most recent fiscal year ending June 30, 2023, the company's cash conversion cycle was 39.67 days, indicating that it takes approximately 39.67 days for the company to convert its investments in inventory and accounts receivable into cash flows from sales.
Comparing this to the previous years, we can see a downward trend in the cash conversion cycle from 2021 to 2023, which suggests improvement in the company's efficiency in managing its working capital. The decrease in the cash conversion cycle indicates that Performance Food Group Co has been able to shorten the time it takes to sell inventory and collect receivables, resulting in quicker cash inflows.
However, it is important to note that the cash conversion cycle was significantly lower in 2020 at 19.73 days compared to subsequent years. This may indicate that the company was able to manage its working capital more effectively in that particular year.
Overall, a lower cash conversion cycle indicates better liquidity and efficiency in managing working capital. Companies with shorter cash conversion cycles are typically able to generate cash more quickly and have better control over their operating cycle. Performance Food Group Co's decreasing trend in the cash conversion cycle over the past three years is a positive sign of improved working capital management.
Peer comparison
Jun 30, 2023