SPS Commerce Inc (SPSC)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | 125.80 | 123.43 | 137.11 |
| Days of sales outstanding (DSO) | days | 29.78 | 31.84 | 31.92 | 32.74 | 39.20 |
| Number of days of payables | days | 14.86 | 14.88 | 26.84 | 23.09 | 19.57 |
| Cash conversion cycle | days | 14.92 | 16.97 | 130.88 | 133.08 | 156.74 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 29.78 – 14.86
= 14.92
The cash conversion cycle of SPS Commerce Inc has exhibited a notable improvement over the past five years, reflecting the company's efficiency in managing its liquidity and working capital.
Starting at 156.74 days as of December 31, 2020, the cash conversion cycle steadily decreased to 133.08 days by December 31, 2021, showing an early sign of enhanced operational efficiency. This positive trend continued over the next two years, with further reductions to 130.88 days by December 31, 2022 and a significant drop to 16.97 days by December 31, 2023.
The most recent data as of December 31, 2024, highlights a further improvement to just 14.92 days, indicating that the company has optimized its processes related to accounts receivable collection, inventory turnover, and accounts payable management.
Overall, the consistent decline in the cash conversion cycle demonstrates SPS Commerce Inc's ability to swiftly convert its investments in inventory into cash, showcasing effective working capital management practices and efficient operations. This trend is favorable as it signifies the company's capacity to generate cash flow and enhance its overall financial health.
Peer comparison
Dec 31, 2024