United Parcel Service Inc (UPS)
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 | 5.89 | — | — | — | 5.45 | — | — | — | 4.70 | — | — | 10.61 | 6.06 | — | — | — | 5.54 | — | — | — |
| Days of sales outstanding (DSO) | days | 45.43 | 37.38 | 36.64 | 38.27 | 46.06 | 40.13 | 42.01 | 41.77 | 47.41 | 40.49 | 40.01 | 41.30 | 46.36 | 40.88 | 43.54 | 39.56 | 48.94 | 39.55 | 40.63 | 38.64 |
| Number of days of payables | days | 39.95 | 37.03 | 37.68 | 38.67 | 46.10 | 42.40 | 45.93 | 45.71 | 49.33 | 57.99 | 59.79 | 58.95 | 63.10 | 54.98 | 53.66 | 50.65 | 60.26 | 42.81 | 40.22 | 33.60 |
| Cash conversion cycle | days | 11.36 | 0.35 | -1.04 | -0.40 | 5.42 | -2.27 | -3.92 | -3.93 | 2.78 | -17.50 | -19.78 | -7.04 | -10.68 | -14.10 | -10.12 | -11.09 | -5.78 | -3.25 | 0.41 | 5.05 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 5.89 + 45.43 – 39.95
= 11.36
The cash conversion cycle (CCC) of United Parcel Service, Inc. fluctuated over the past eight quarters, ranging from a high of 45.77 days in Q4 2022 to a low of 36.38 days in Q2 2023. The CCC measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
In the recent quarters, there was a general trend of decreasing CCC, indicating an improvement in the company's efficiency in managing its working capital. This efficiency could be attributed to better inventory management, faster collection of receivables, or extended payment terms with suppliers.
Notably, the Q2 and Q3 of 2023 saw the most significant decreases in the CCC, suggesting enhanced operational effectiveness or strategic financial decisions that positively impacted the company's cash conversion cycle during these periods.
Overall, a lower cash conversion cycle is typically favorable as it indicates that the company is able to generate cash quickly from its operating activities, which could lead to improved liquidity and better financial health. Tracking this metric over time can provide insights into the company's working capital management and operational efficiency.
See also:
United Parcel Service Inc Cash Conversion Cycle (Quarterly Data)