Trex Company Inc (TREX)
Days of sales outstanding (DSO)
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Receivables turnover | 21.53 | 5.34 | 3.40 | 3.12 | 8.94 | 13.54 | 7.63 | 6.40 | 7.90 | 4.22 | 3.75 | 2.99 | 7.70 | 3.23 | 3.13 | 3.17 | 9.20 | 6.13 | 5.66 | 3.16 | |
| DSO | days | 16.95 | 68.33 | 107.40 | 116.98 | 40.84 | 26.95 | 47.84 | 57.03 | 46.20 | 86.44 | 97.33 | 121.96 | 47.43 | 113.04 | 116.59 | 114.96 | 39.69 | 59.55 | 64.44 | 115.61 |
December 31, 2023 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 21.53
= 16.95
Days of sales outstanding (DSO) is a key metric used to evaluate how efficiently a company is collecting its accounts receivable. A lower DSO indicates faster collection times, which is generally favorable as it implies better cash flow management and potentially fewer bad debts.
Analyzing TREX Co., Inc.'s DSO over the past eight quarters reveals fluctuations in the collection efficiency. In Q1 2023, the DSO was at its highest point of 114.96 days, indicating that it took the company over three months to collect its outstanding sales. This was a significant increase from the previous quarter and was well above the industry average.
However, in Q4 2023, the DSO dropped significantly to 16.92 days, showcasing a remarkable improvement in the company's collections process. This sharp decline suggests that TREX Co., Inc. was able to collect its accounts receivable much faster in the most recent quarter, potentially signaling enhanced credit control or more prompt customer payments.
Looking at the trend over the past two years, TREX Co., Inc. experienced fluctuations in DSO, with periods of both increase and decrease. This variability could be influenced by factors such as changes in sales volume, customer payment behavior, or credit policies. It is crucial for the company to closely monitor and manage its DSO to ensure efficient working capital management and sustained financial health in the long term.
In conclusion, while TREX Co., Inc. has shown improvement in DSO in Q4 2023, it is essential for the company to strive for consistency and aim for lower DSO figures to optimize cash flow and working capital management.
Peer comparison
Dec 31, 2023