Atmos Energy Corporation (ATO)

Cash conversion cycle

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Days of inventory on hand (DOH)	days	61.79	77.64	62.95	62.02	55.31
Days of sales outstanding (DSO)	days	29.25	32.63	36.74	29.83	29.00
Number of days of payables	days	—	—	—	—	—
Cash conversion cycle	days	91.04	110.27	99.69	91.85	84.31

September 30, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 61.79 + 29.25 – —
= 91.04

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle indicates that the company is efficiently managing its inventory, collecting receivables, and paying its obligations.

Looking at the cash conversion cycle of Atmos Energy Corp. from 2019 to 2023, there has been an increasing trend, with the cycle lengthening from 11.78 days in 2019 to 43.63 days in 2023. This indicates a potential decrease in efficiency in managing working capital.

The increase in the cash conversion cycle could be attributed to changes in the company's inventory management, collection of receivables, or payment of payables. A longer cash conversion cycle may tie up more of the company's cash, potentially impacting its liquidity and working capital management.

It would be essential for Atmos Energy Corp. to assess and address the factors contributing to the lengthening of the cash conversion cycle in order to improve its working capital efficiency and maintain optimal liquidity levels.