XPO Logistics Inc (XPO)

Cash conversion cycle

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Days of inventory on hand (DOH) days — — — — — — — 0.97 0.77 0.57 0.62 0.74 0.79 0.99 — — — — — —
Days of sales outstanding (DSO) days 47.42 48.00 49.53 50.05 45.86 50.63 48.40 48.11 45.12 79.15 75.36 69.86 59.83 58.18 97.51 93.96 80.65 67.32 52.15 53.61
Number of days of payables days 42.61 39.94 43.37 52.79 50.19 59.82 38.60 30.50 23.70 34.52 37.89 41.04 15.74 38.22 51.51 57.96 39.63 47.46 38.94 47.64
Cash conversion cycle days 4.81 8.07 6.16 -2.75 -4.33 -9.19 9.81 18.58 22.19 45.20 38.10 29.56 44.89 20.95 46.00 36.00 41.02 19.86 13.21 5.97

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 47.42 – 42.61
= 4.81

The cash conversion cycle of XPO Logistics Inc has fluctuated over the years, indicating varying efficiency in managing its working capital. The cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

Starting from March 31, 2020, XPO Logistics had a relatively low cash conversion cycle of 5.97 days, suggesting a quick turnover of its assets. However, the cycle increased consistently in the subsequent quarters, reaching a peak of 46 days on June 30, 2021. This prolonged cycle could indicate challenges in efficiently managing inventory, collecting receivables, or managing payables during that period.

Subsequently, the cash conversion cycle started to decrease, indicating improvements in working capital management. By December 31, 2024, the cycle had significantly improved to just 4.81 days, showing that the company was able to convert its resources into cash more rapidly.

Notably, the negative values recorded for September 30, 2023, and December 31, 2023, suggest that XPO Logistics was able to convert its investments into cash at a faster rate than the time it took to pay off its current liabilities. This efficient cycle could indicate effective management of working capital during those periods.

Overall, fluctuations in the cash conversion cycle of XPO Logistics Inc reflect the company's efforts to optimize its working capital practices and enhance liquidity over time.