Xpel Inc (XPEL)
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 | 116.26 | 107.16 | 85.53 | 59.80 | 48.61 |
| Days of sales outstanding (DSO) | days | 22.90 | 16.69 | 19.44 | 22.92 | 20.38 |
| Number of days of payables | days | 26.45 | 22.19 | 41.46 | 34.72 | 23.89 |
| Cash conversion cycle | days | 112.71 | 101.65 | 63.51 | 47.99 | 45.10 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 116.26 + 22.90 – 26.45
= 112.71
The cash conversion cycle of XPEL Inc has shown a fluctuating trend over the past five years. In 2023, the company's cash conversion cycle increased to 151.25 days, representing a longer period compared to the previous year. This indicates that the company took longer to convert its investments in inventory and accounts receivable into cash during 2023. The increase in the cash conversion cycle suggests potential inefficiencies in managing inventory, collecting receivables, or delaying payment to suppliers.
Comparing 2023 to 2022, there was a significant deterioration in the company's cash conversion cycle, reflecting a negative trend in working capital management. The company experienced a substantial increase in the time it takes to convert its resources into cash.
However, when looking at the longer-term trend, the cash conversion cycle has generally increased over the past five years, indicating a potential worsening in the company's liquidity and efficiency in managing its working capital. This trend suggests that XPEL Inc may need to improve its inventory management, accelerate accounts receivable collections, or streamline its payment processes to enhance cash flow and operational efficiency.