RB Global Inc. (RBA)

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	62.13	59.82	69.47	71.49	59.92
Days of sales outstanding (DSO)	days	73.55	39.80	43.99	37.58	39.92
Number of days of payables	days	55.60	54.45	66.86	69.83	73.41
Cash conversion cycle	days	80.08	45.17	46.61	39.23	26.43

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 62.13 + 73.55 – 55.60
= 80.08

RB Global Inc.'s cash conversion cycle has been fluctuating over the past five years. The cycle measures the time it takes for the company to convert its investments in inventory and accounts receivable into cash flows from sales.

In 2019, RB Global Inc. had a relatively short cash conversion cycle of 26.43 days, indicating efficient management of inventory and collection of accounts receivable. However, over the following years, the cycle increased significantly, with the highest cycle of 80.08 days in 2023.

The increasing trend in the cash conversion cycle implies that RB Global Inc. may be facing challenges in managing its working capital efficiently. A longer cash conversion cycle can tie up capital in inventory and accounts receivable, potentially leading to liquidity issues and impacting the company's profitability.

RB Global Inc. should focus on streamlining its inventory management and improving its accounts receivable collection processes to reduce the cash conversion cycle. By doing so, the company can enhance its cash flow management and overall financial performance.