Quanta Services Inc (PWR)
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 | 3.24 | 2.32 | 2.50 | 1.74 | 1.76 |
| Days of sales outstanding (DSO) | days | 77.79 | 79.06 | 96.06 | 88.83 | 83.23 |
| Number of days of payables | days | 37.39 | 29.24 | 36.96 | 27.47 | 25.25 |
| Cash conversion cycle | days | 43.64 | 52.13 | 61.60 | 63.09 | 59.74 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 3.24 + 77.79 – 37.39
= 43.64
Quanta Services, Inc.'s cash conversion cycle has shown a decreasing trend over the five-year period from 2019 to 2023, indicating an improvement in the company's efficiency in managing its working capital. In 2019, the cash conversion cycle was 57.01 days, which decreased to 39.43 days by the end of 2023.
A shorter cash conversion cycle suggests that Quanta Services is collecting cash from its customers, converting inventory into sales, and paying suppliers more efficiently. This could be a positive sign of effective management of accounts receivable, inventory, and accounts payable.
Overall, the decreasing trend in the cash conversion cycle indicates that Quanta Services has been able to streamline its working capital management processes and optimize its cash flow over the years.
Peer comparison
Dec 31, 2023