Trex Company Inc (TREX)
Days of sales outstanding (DSO)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Receivables turnover | 21.51 | 8.94 | 7.90 | 7.70 | 9.20 | |
| DSO | days | 16.97 | 40.84 | 46.20 | 47.42 | 39.67 |
December 31, 2023 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 21.51
= 16.97
TREX Co., Inc.'s days of sales outstanding (DSO) measures the average number of days it takes for the company to collect payment from its customers after making sales. A lower DSO indicates a more efficient accounts receivable management system.
From 2019 to 2023, TREX Co., Inc.'s DSO has shown a declining trend, decreasing from 39.73 days in 2019 to 16.92 days in 2023. This suggests that the company has been able to improve its collection processes and is collecting payments from customers at a faster rate.
The significant drop in DSO from 2022 to 2023, from 40.27 days to 16.92 days, indicates a substantial improvement in the company's ability to convert sales into cash quickly. This could be attributed to more stringent credit policies, better collection practices, or improved customer relationships.
Overall, TREX Co., Inc.'s decreasing DSO trend is a positive indicator of the company's financial health and efficiency in managing its accounts receivable. A lower DSO implies better cash flow management and liquidity, which can contribute to the company's overall profitability and financial stability.
Peer comparison
Dec 31, 2023