Ufp Industries Inc (UFPI)
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 | 45.80 | 45.33 | 48.64 | 47.56 | 47.64 |
| Days of sales outstanding (DSO) | days | 29.27 | 24.67 | 31.39 | 33.73 | 31.19 |
| Number of days of payables | days | 12.78 | 9.64 | 16.11 | 17.73 | 13.94 |
| Cash conversion cycle | days | 62.29 | 60.36 | 63.91 | 63.56 | 64.88 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 45.80 + 29.27 – 12.78
= 62.29
The cash conversion cycle of Ufp Industries Inc has been relatively stable over the past five years, ranging from 60.36 days to 64.88 days. This metric indicates the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales, and then finally back into cash through collections from customers.
A lower cash conversion cycle is generally preferred as it signifies that the company is able to generate cash quickly from its operational activities. Ufp Industries Inc's cash conversion cycle has hovered around 60-65 days, suggesting that the company manages its inventory and receivables efficiently, but there may be room for further improvement in streamlining its working capital management.
Overall, the consistency in Ufp Industries Inc's cash conversion cycle over the years indicates a degree of effectiveness in managing its working capital, but the company may explore opportunities to shorten this cycle further to enhance its cash flow efficiency.