Trex Company Inc (TREX)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 89.43 | 79.63 | 60.41 | 50.71 | 47.74 | 27.10 | 35.31 | 59.68 | 61.13 | 50.46 | 35.95 | 36.38 | 33.16 | 32.84 | 37.33 | 40.08 | 38.47 | 31.60 | 32.32 | 38.12 |
| Days of sales outstanding (DSO) | days | 28.07 | 43.40 | 78.93 | 111.05 | 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 |
| Number of days of payables | days | 26.44 | 26.05 | 24.05 | 20.20 | 10.68 | 14.27 | 15.38 | 10.80 | 8.62 | 8.36 | 20.61 | 22.87 | 9.84 | 20.26 | 20.72 | 20.93 | 21.77 | 20.43 | 18.31 | 18.77 |
| Cash conversion cycle | days | 91.07 | 96.98 | 115.28 | 141.56 | 54.00 | 81.16 | 127.34 | 165.85 | 93.34 | 69.06 | 63.18 | 70.54 | 69.52 | 99.02 | 113.94 | 141.11 | 64.12 | 124.22 | 130.59 | 134.31 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 89.43 + 28.07 – 26.44
= 91.07
The cash conversion cycle of Trex Company Inc, which measures how long it takes for the company to convert its investments in inventory and other resources into cash flows from sales, has shown some fluctuations over the past few years.
From March 2020 to December 2024, the cash conversion cycle ranged from a high of 165.85 days in March 2023 to a low of 54.00 days in December 2023. This indicates that the company's efficiency in managing its working capital has varied significantly during this period.
In general, a lower cash conversion cycle is preferable as it indicates that the company is able to collect cash from its sales quickly and efficiently. Conversely, a longer cash conversion cycle may suggest inefficiencies in managing inventory levels, accounts receivable, or accounts payable.
Trex Company Inc's cash conversion cycle decreased from 134.31 days in March 2020 to 91.07 days in December 2024. This downward trend suggests that the company has improved its working capital management over this time period, leading to a more efficient cash conversion cycle.
However, there were fluctuations along the way, such as the significant increase in the cash conversion cycle from March 2023 to March 2024, indicating potential challenges in managing working capital during that period.
Overall, continuous monitoring and improvement of the cash conversion cycle are crucial for Trex Company Inc to ensure efficient operations and optimal cash flow management.
Peer comparison
Dec 31, 2024