American Water Works (AWK)

Cash conversion cycle

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Days of inventory on hand (DOH) days 786.15 872.44 547.50 389.89 382.38
Days of sales outstanding (DSO) days 62.93 69.78 40.50 50.93 47.17
Number of days of payables days 2,063.65 2,261.22 2,257.24 1,567.84 1,764.17
Cash conversion cycle days -1,214.57 -1,319.00 -1,669.23 -1,127.03 -1,334.62

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 786.15 + 62.93 – 2,063.65
= -1,214.57

The cash conversion cycle of American Water Works Co. Inc. has shown variability over the past five years. In 2023, the cash conversion cycle decreased to 55.26 days from 58.62 days in 2022. This indicates that the company took slightly less time to convert its investments in inventory into cash during the most recent year.

Compared to 2021 and 2020, where the cash conversion cycle was 48.20 days and 50.93 days respectively, the cycle lengthened in 2022 but improved in 2023. However, the cash conversion cycle in 2019 was lower at 47.12 days compared to 2023, suggesting a slightly more efficient performance in converting assets to cash during that period.

Overall, the trend in the cash conversion cycle of American Water Works Co. Inc. has shown fluctuations, with some improvements and setbacks in the efficiency of the company's working capital management over the years. It is essential for investors and stakeholders to closely monitor this metric to assess the company's operational effectiveness and liquidity management.


Peer comparison

Dec 31, 2023