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

Company name
Symbol
Cash conversion cycle
Republic Services Inc
RSG
-5.61
Waste Management Inc
WM
15.40