XPO Logistics Inc (XPO)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | 1.01 | 0.88 | — |
| Days of sales outstanding (DSO) | days | 47.42 | 45.86 | 45.12 | 106.68 | 170.78 |
| Number of days of payables | days | 42.47 | 49.98 | 30.95 | 17.57 | 28.68 |
| Cash conversion cycle | days | 4.95 | -4.12 | 15.18 | 89.99 | 142.10 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 47.42 – 42.47
= 4.95
The cash conversion cycle of XPO Logistics Inc has shown significant improvement over the years based on the provided data.
As of December 31, 2020, the company's cash conversion cycle stood at 142.10 days, indicating that it took XPO Logistics 142.10 days to convert its invested cash back into cash inflows through its operational activities.
By December 31, 2021, XPO Logistics had managed to reduce its cash conversion cycle to 89.99 days, demonstrating an improvement in efficiency in managing its working capital and cash flow processes.
The following year, as of December 31, 2022, XPO Logistics achieved a substantial reduction in its cash conversion cycle to 15.18 days, signifying a more streamlined and effective cash management system in place.
By December 31, 2023, XPO Logistics reported a negative cash conversion cycle of -4.12 days, indicating that the company was able to convert cash inflows into cash outflows at a faster rate than the time it took to receive payments from customers. This could suggest efficient inventory management and favorable payment terms.
Lastly, by December 31, 2024, the cash conversion cycle slightly increased to 4.95 days, still reflecting a relatively efficient cash conversion process for XPO Logistics.
Overall, the decreasing trend in the cash conversion cycle over the years showcases XPO Logistics' improved ability to manage working capital more effectively and generate cash flows efficiently. It indicates that the company has been successful in optimizing its cash conversion processes and enhancing overall liquidity management.
Peer comparison
Dec 31, 2024