American States Water Company (AWR)

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	33.79	29.42	24.55	17.14	13.45
Days of sales outstanding (DSO)	days	35.43	37.70	45.22	41.19	36.26
Number of days of payables	days	132.09	170.69	133.04	126.83	116.33
Cash conversion cycle	days	-62.88	-103.57	-63.27	-68.50	-66.62

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 33.79 + 35.43 – 132.09
= -62.88

The cash conversion cycle reflects how efficiently American States Water Co. manages its cash flows related to its operating cycle. A negative cash conversion cycle indicates that the company is able to collect cash from customers before it needs to pay its suppliers, which is generally a positive sign.

Over the past five years, American States Water Co. has shown variations in its cash conversion cycle. In 2023, the company's cash conversion cycle improved significantly to -105.64 days from -173.04 days in 2022. This suggests that the company streamlined its operations to collect cash faster or managed to extend its payables period without impacting its receivables.

Comparing to previous years, the cash conversion cycle in 2021 was also better than in 2020, showing a trend of improvement. However, in 2020 and 2019, the company had slightly higher but still negative cash conversion cycles, indicating some inefficiencies in managing cash flows compared to the more recent years.

Overall, the trend in American States Water Co.'s cash conversion cycle indicates improvements in managing cash flows efficiently over the years, with 2023 showing a particularly strong performance in this aspect.