Ufp Industries Inc (UFPI)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	45.80	44.36	45.85	48.08	45.33	46.37	51.64	58.31	48.64	48.41	59.76	59.78	47.56	48.39	45.10	49.91	47.64	46.78	50.53	54.38
Days of sales outstanding (DSO)	days	29.27	34.74	36.76	—	24.67	34.01	40.71	42.99	31.39	36.35	48.33	49.60	33.73	44.73	43.04	38.16	31.19	39.45	39.59	36.31
Number of days of payables	days	12.78	15.07	14.76	13.92	9.64	14.89	18.06	20.19	16.11	15.75	20.93	21.74	17.73	21.15	19.57	15.84	13.94	17.64	18.13	16.00
Cash conversion cycle	days	62.29	64.03	67.85	34.16	60.36	65.48	74.29	81.11	63.91	69.02	87.16	87.64	63.56	71.97	68.57	72.23	64.88	68.59	71.99	74.70

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 measures how long it takes for a company to convert its investments in inventory and accounts receivable into cash flows from sales and back into cash. A shorter cash conversion cycle is generally favorable as it indicates efficient management of working capital.

Analyzing the data provided for Ufp Industries Inc over the past few quarters, we observe fluctuations in the cash conversion cycle. In the most recent quarter ending December 31, 2023, the cash conversion cycle was 62.29 days, showing an improvement compared to the previous quarter. This suggests that the company was able to manage its inventory levels and collect receivables more efficiently during this period.

Looking back further, we notice that the cash conversion cycle has varied between 34.16 days and 87.64 days over the past few years. The lowest value of 34.16 days in March 31, 2023, indicates exceptionally efficient management of working capital during that period. On the flip side, the highest value of 87.64 days in June 30, 2021, suggests challenges in converting investments into cash during that particular quarter.

Overall, Ufp Industries Inc has shown fluctuating performance in its cash conversion cycle, indicating varying levels of efficiency in managing working capital over the periods analyzed. It is essential for the company to focus on improving this metric consistently to optimize its cash flows and enhance overall financial performance.