Packaging Corp of America (PKG)
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 | 55.22 | 53.78 | 53.48 | 52.94 | 51.08 | 51.99 | 50.74 | 51.77 | 51.32 | 51.79 | 49.84 | 49.53 | 49.26 | 48.31 | 51.81 | 49.69 | 48.99 | 50.08 | 50.46 | 51.39 |
| Days of sales outstanding (DSO) | days | 49.07 | 49.21 | 47.07 | 45.83 | 46.59 | 49.17 | 54.12 | 53.28 | 52.62 | 53.91 | 51.22 | 49.81 | 46.51 | 47.97 | 45.30 | 46.82 | 46.28 | 49.79 | 50.05 | 38.65 |
| Number of days of payables | days | 21.93 | 22.14 | 19.72 | 21.66 | 21.45 | 25.36 | 28.08 | 30.07 | 25.73 | 29.37 | 24.42 | 24.93 | 24.20 | 21.88 | 19.57 | 23.87 | 21.71 | 23.94 | 23.68 | 25.03 |
| Cash conversion cycle | days | 82.36 | 80.85 | 80.83 | 77.11 | 76.22 | 75.80 | 76.77 | 74.98 | 78.22 | 76.33 | 76.64 | 74.40 | 71.57 | 74.41 | 77.55 | 72.65 | 73.56 | 75.92 | 76.83 | 65.01 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 55.22 + 49.07 – 21.93
= 82.36
The cash conversion cycle of Packaging Corp Of America has shown a slight upward trend over the past eight quarters. In Q4 2023, the cash conversion cycle was 85.06 days, indicating that on average it takes the company approximately 85 days to convert its resources into cash. This is a longer period compared to the previous quarters, with Q3 2023 and Q2 2023 standing at 83.34 days and 83.47 days respectively.
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash from sales. A longer cash conversion cycle can indicate inefficiencies in managing inventory, collecting receivables, or paying suppliers.
It is worth noting that in the past year, Packaging Corp Of America has experienced some fluctuations in its cash conversion cycle, with the cycle peaking at 85.06 days in Q4 2023. This signals a potential need for the company to focus on optimizing its working capital management to shorten the conversion cycle and improve cash flow efficiency.
Overall, the upward trend in the cash conversion cycle of Packaging Corp Of America suggests room for improvement in managing its operating cycle and liquidity position in order to enhance its financial performance and effectiveness in converting resources into cash.
Peer comparison
Dec 31, 2023