UFP Technologies Inc (UFPT)

Days of sales outstanding (DSO)

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Receivables turnover		5.97	6.18	6.80	5.24	6.77
DSO	days	61.12	59.09	53.66	69.70	53.94

December 31, 2024 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 5.97
= 61.12

Days Sales Outstanding (DSO) is an important metric that indicates the average number of days it takes for a company to collect payment after making a sale. A lower DSO value is generally favorable as it suggests that the company is efficient in collecting its accounts receivable.

Analyzing the trend of DSO for UFP Technologies Inc over the past five years, we observe the following:

1. In 2020, the DSO was 53.94 days, indicating that on average, it took the company around 54 days to collect payments from its customers.

2. By 2021, the DSO increased to 69.70 days, which suggests a lengthening in the collection period compared to the previous year. This could potentially indicate challenges in collecting payments on time or changes in the company's customer base.

3. In 2022, the DSO decreased to 53.66 days, showing a positive improvement in the collection period compared to 2021. This reduction may reflect efforts by the company to streamline its accounts receivable processes.

4. The DSO slightly increased to 59.09 days in 2023, which could be an indication of a moderate slowdown in the collection of accounts receivable.

5. By the end of 2024, the DSO rose further to 61.12 days, reflecting a continued increase in the average collection period. It is important for the company to closely monitor this metric to ensure the timely collection of outstanding payments.

Overall, fluctuations in DSO may be influenced by various factors such as sales growth, credit policies, customer payment behaviors, and economic conditions. Continuous evaluation and management of DSO are crucial for maintaining healthy cash flows and working capital efficiency for UFP Technologies Inc.