Parsons Corp (PSN)

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	—	—	0.13	0.34	1.15
Days of sales outstanding (DSO)	days	80.09	81.83	76.76	83.12	82.69
Number of days of payables	days	16.96	17.73	19.31	21.11	19.60
Cash conversion cycle	days	63.13	64.10	57.58	62.34	64.24

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 80.09 – 16.96
= 63.13

The cash conversion cycle of Parsons Corp has fluctuated over the past five years, with a high of 64.24 days in 2019 and a low of 57.58 days in 2021. It measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales. A lower cycle indicates that the company is able to more efficiently manage its working capital and generate cash.

In 2023, the cash conversion cycle decreased slightly to 63.13 days from 64.10 days in 2022. This could suggest that Parsons Corp made improvements in managing its inventory, reducing the time it takes to sell its products and collect payment from customers. However, the company's cycle still remains higher than in 2021, indicating that there may still be room for further optimization in working capital management.

Overall, monitoring the cash conversion cycle trends can provide valuable insights into the company's liquidity, operational efficiency, and ability to generate cash flows from its core business activities. Continued focus on streamlining processes and improving inventory turnover could further enhance Parsons Corp's financial performance in the future.