XPO Logistics Inc (XPO)

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	—	—	—	0.97	0.77	0.57	0.62	0.74	0.79	0.99	—	—	—	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	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	54.65	55.65	58.18	59.73
Number of days of payables	days	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	51.10	50.00	50.99	50.54
Cash conversion cycle	days	-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	3.55	5.65	7.19	9.19

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 45.86 – 50.19
= -4.33

The cash conversion cycle of XPO Inc has fluctuated significantly over the past eight quarters. In Q1 2023, the company had a negative cash conversion cycle of -1.71 days, indicating that it was able to convert its inventory and receivables into cash quickly. This was a significant improvement compared to the previous quarter where the cash conversion cycle was 102.39 days, showing a substantial increase in efficiency.

However, in Q2 2023, the cash conversion cycle further worsened to -58.78 days, indicating a reversal in the company's ability to manage its cash conversion cycle efficiently. This was followed by a significant drop in Q3 2023 to -64.47 days, indicating a further deterioration in the efficiency of converting inventory and receivables into cash.

Looking back at the previous quarters, the company had shown relatively stable performance in managing its cash conversion cycle. In Q4 2022, the company had a cash conversion cycle of 6.66 days, which increased slightly to 33.32 days in Q3 2022 but improved in Q2 2022 to 35.94 days.

Overall, the fluctuation in XPO Inc's cash conversion cycle indicates potential challenges in effectively managing working capital and converting inventory and receivables into cash efficiently. It is important for the company to closely monitor and address the factors contributing to these fluctuations to ensure optimal cash flow management.