Parsons Corp (PSN)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	—	—	—	0.13	0.34
Days of sales outstanding (DSO)	days	81.23	80.09	81.83	76.76	83.12
Number of days of payables	days	11.84	16.96	17.73	19.31	21.11
Cash conversion cycle	days	69.39	63.13	64.10	57.58	62.34

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 81.23 – 11.84
= 69.39

The cash conversion cycle for Parsons Corp has varied over the past five years. As of December 31, 2020, the company's cash conversion cycle was 62.34 days, indicating that it took about 62 days for the company to convert its investments in inventory and other resources into cash from sales.

Over the next few years, the cash conversion cycle fluctuated, with a slight decrease to 57.58 days as of December 31, 2021, followed by an increase to 64.10 days by December 31, 2022. The cycle then decreased slightly to 63.13 days by December 31, 2023 but saw a significant increase to 69.39 days by December 31, 2024.

Overall, the trend in the cash conversion cycle suggests that Parsons Corp may have experienced some challenges in efficiently managing its working capital and converting its investments into cash during certain periods. It is vital for the company to closely monitor and manage its inventory, accounts receivable, and accounts payable to optimize its cash conversion cycle and improve its overall liquidity position.