Republic Services Inc (RSG)
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 | 3.26 | 3.56 | 3.23 | 2.94 | 2.74 |
| Days of sales outstanding (DSO) | days | 38.69 | 40.52 | 35.72 | 34.08 | 36.34 |
| Number of days of payables | days | 47.34 | 44.97 | 40.77 | 38.70 | 37.55 |
| Cash conversion cycle | days | -5.38 | -0.89 | -1.82 | -1.68 | 1.53 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 3.26 + 38.69 – 47.34
= -5.38
The cash conversion cycle of Republic Services, Inc. has exhibited fluctuating trends over the past five years. In 2023, the company had a negative cash conversion cycle of -5.02 days, indicating that it was able to convert its inventory into cash at a faster rate compared to the previous years. This improvement suggests better management of working capital and more efficient operations.
In 2022 and 2021, the company's cash conversion cycle was positive at 3.51 days and 3.36 days, respectively, reflecting that it took around 3 days to convert its resources into cash. These figures remained relatively stable and indicate a consistent operational efficiency in converting inventory into sales and collecting receivables.
In 2020, there was a slight increase in the cash conversion cycle to 4.68 days, signaling a marginal slowdown in the conversion process compared to the previous year. Similarly, in 2019, the cash conversion cycle was at its highest point of 7.92 days, indicating a longer time taken to convert resources into cash, potentially pointing to operational inefficiencies or challenges in managing working capital.
Overall, the decreasing trend in the cash conversion cycle from 2019 to 2023 suggests that Republic Services, Inc. has been improving its working capital management and operational efficiency over the years. However, it is essential for the company to monitor and potentially further reduce this cycle duration to enhance liquidity and optimize its financial performance.
Peer comparison
Dec 31, 2023