Tractor Supply Company (TSCO)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 103.54 | 107.12 | 96.90 | 94.90 | 106.75 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | 46.17 | 55.28 | 51.10 | 51.94 | 42.83 |
| Cash conversion cycle | days | 57.37 | 51.84 | 45.79 | 42.95 | 63.92 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 103.54 + — – 46.17
= 57.37
The cash conversion cycle of Tractor Supply Company has shown a fluctuating trend over the past five years. The cycle increased from 42.95 days in 2020 to 57.37 days in 2023, indicating a longer period for the company to convert its investments in inventory and other resources back into cash. This suggests potential liquidity challenges or inefficiencies in the company's operations during the most recent year.
The increase in the cash conversion cycle could be attributed to factors such as slower inventory turnover, prolonged accounts receivable collection, or delayed payment of accounts payable. It is important for Tractor Supply Company to assess and address these issues to improve its cash conversion efficiency and overall liquidity position.
Despite the fluctuation, the company's cash conversion cycle has generally been within a reasonable range compared to historical data, suggesting that Tractor Supply Company has managed its working capital effectively. However, monitoring and potentially optimizing the cash conversion cycle can help enhance the company's cash flow management and overall financial performance in the future.
Peer comparison
Dec 31, 2023