Republic Services Inc (RSG)
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 | 3.28 | 3.44 | 3.35 | 3.47 | 3.60 | 3.93 | 4.12 | 3.51 | 3.26 | 4.18 | 4.09 | 4.08 | 3.93 | 2.93 | 2.87 | 2.74 | 2.75 | 2.67 | 2.74 | 2.72 |
| Days of sales outstanding (DSO) | days | 38.69 | 40.56 | 39.24 | 38.81 | 40.53 | 42.70 | 42.81 | 35.96 | 35.72 | 36.90 | 34.97 | 34.55 | 34.08 | 34.46 | 32.80 | 34.30 | 36.34 | 36.14 | 35.42 | 33.61 |
| Number of days of payables | days | 47.58 | 41.27 | 38.28 | 34.92 | 45.56 | 39.80 | 42.99 | 36.89 | 41.03 | 50.01 | 46.61 | 45.31 | 51.79 | 32.23 | 32.27 | 31.73 | 37.61 | 33.65 | 35.03 | 30.90 |
| Cash conversion cycle | days | -5.61 | 2.74 | 4.32 | 7.37 | -1.43 | 6.83 | 3.94 | 2.58 | -2.06 | -8.93 | -7.54 | -6.68 | -13.78 | 5.17 | 3.40 | 5.31 | 1.48 | 5.16 | 3.13 | 5.43 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 3.28 + 38.69 – 47.58
= -5.61
The cash conversion cycle measures how long it takes a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally preferred as it indicates that the company is efficiently managing its working capital.
For Republic Services, Inc., the cash conversion cycle has fluctuated over the past eight quarters. In Q4 2023, the company had a negative cash conversion cycle of -5.02 days, significantly improving from the previous quarter where it stood at 2.76 days. This negative value suggests that Republic Services, Inc. is able to collect cash from customers before paying off its suppliers, which is a favorable position.
Looking at the trend, the company's cash conversion cycle has shown improvement since Q1 2023, where it was at 10.90 days. This indicates that Republic Services, Inc. has been able to streamline its operations and manage its working capital more effectively.
However, it's essential to note that a negative cash conversion cycle may not be sustainable in the long term, as it could indicate aggressive accounts payable practices or issues with inventory management. It is important for the company to strike a balance between collecting cash quickly and maintaining healthy supplier relationships.
Overall, the recent improvement in Republic Services, Inc.'s cash conversion cycle suggests that the company has been successful in optimizing its working capital efficiency, which bodes well for its financial health and stability.
Peer comparison
Dec 31, 2023