Avista Corporation (AVA)

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	92.09	85.92	313.86	—	—	6,541.54	5,607.57	4,024.64	4,403.12	2,362.61	2,223.58	1,682.36	1,782.61	1,155.55	1,127.83	950.37	586.92	752.44	728.61	641.48
Days of sales outstanding (DSO)	days	67.62	34.33	34.91	51.78	78.58	42.17	45.59	55.83	77.91	44.68	41.68	53.62	78.65	32.16	32.47	42.31	65.36	29.28	30.87	44.89
Number of days of payables	days	82.46	62.33	280.75	—	—	5,969.19	6,430.43	5,906.48	6,916.29	2,785.83	2,794.93	2,479.86	2,817.59	1,401.16	1,853.81	1,478.58	971.57	1,014.90	868.18	1,149.28
Cash conversion cycle	days	77.25	57.92	68.02	51.78	78.58	614.53	-777.28	-1,826.01	-2,435.26	-378.54	-529.67	-743.88	-956.33	-213.45	-693.51	-485.90	-319.29	-233.18	-108.69	-462.91

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 92.09 + 67.62 – 82.46
= 77.25

The cash conversion cycle of Avista Corp. fluctuated over the past eight quarters, with significant variations observed. In Q4 2023, the company's cash conversion cycle was 59.95 days, representing an increase from the previous quarter. This indicates that Avista Corp. took longer to convert its investments in inventory and receivables into cash during this period compared to Q3 2023.

Looking further back, Q3 2023 showed an improvement with a cash conversion cycle of 54.36 days, displaying a decrease from the previous quarter. However, the trend reversed in Q2 2023 with a cycle of 41.05 days, showing a shorter duration. Q1 2023 saw a slight increase to 46.63 days compared to Q2 2023, indicating a longer conversion cycle.

Comparing the most recent data to the same quarter in the previous year, Q4 2023 exhibited a substantial increase from 13.88 days in Q4 2022. This suggests that Avista Corp.'s efficiency in converting its resources into cash deteriorated significantly over the year.

The cash conversion cycle is a crucial metric for evaluating the efficiency of a company's working capital management. Avista Corp. should focus on optimizing its inventory turnover, accounts receivable collection, and accounts payable payment processes to shorten the cash conversion cycle and improve liquidity management.