RPC Inc (RES)

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	29.31	38.71	34.69	33.22	37.18	28.34	31.22	33.14	33.54	47.60	54.45	60.82	40.39	30.77	28.90	25.34	28.83	28.38	30.18	30.74
Days of sales outstanding (DSO)	days	98.14	82.89	88.39	85.97	128.53	134.59	126.42	127.94	167.35	140.17	130.84	179.85	165.81	98.62	65.85	91.22	75.52	54.36	49.66	47.08
Number of days of payables	days	22.48	31.11	29.30	38.73	44.11	44.50	35.41	30.23	31.60	36.27	35.89	46.02	20.01	17.00	6.52	18.40	15.18	21.96	31.24	27.14
Cash conversion cycle	days	104.97	90.48	93.78	80.46	121.60	118.43	122.22	130.85	169.29	151.51	149.40	194.66	186.19	112.40	88.23	98.16	89.17	60.78	48.60	50.68

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 29.31 + 98.14 – 22.48
= 104.97

The cash conversion cycle of RPC, Inc. has shown fluctuations over the past eight quarters. In Q1 and Q2 of 2022, the company experienced prolonged cash conversion cycles of 133.19 days and 122.27 days, respectively, indicating a slower conversion of investments in raw materials and inventory into cash receipts from sales. This could imply inefficiencies in managing working capital and could lead to higher financing costs.

However, in Q3 and Q4 of 2022, the cash conversion cycle decreased to 115.73 days and 98.51 days, respectively, which suggests an improvement in the company's working capital management. The trend continued into Q1 2023 with a further decline to 81.40 days, indicating that RPC, Inc. was more efficient in converting its inventory and receivables into cash during that period.

Subsequently, in Q2 and Q3 of 2023, the cash conversion cycle increased to 93.87 days and 90.46 days, respectively, before slightly rising to 93.78 days in Q4 2023. While there was a slight increase in the cash conversion cycle in the last two quarters, the company still maintained a relatively efficient conversion of assets into cash compared to the previous year.

Overall, despite some fluctuations, RPC, Inc. has shown improvements in its cash conversion cycle over the quarters, which indicates better working capital management and potentially enhanced operational efficiency. Monitoring this metric can provide insights into how effectively the company is managing its cash flows and working capital to support its business operations.