American States Water Company (AWR)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	27.61	33.79	29.42	24.55	17.14
Days of sales outstanding (DSO)	days	40.58	35.43	37.70	45.22	41.19
Number of days of payables	days	161.57	132.09	170.69	133.04	126.83
Cash conversion cycle	days	-93.37	-62.88	-103.57	-63.27	-68.50

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 27.61 + 40.58 – 161.57
= -93.37

The cash conversion cycle of American States Water Company has varied over the past five years. As of December 31, 2020, the company had a negative cash conversion cycle of -68.50 days, indicating that it was able to convert its inventory and accounts payable into cash relatively quickly.

By December 31, 2021, the cash conversion cycle had improved slightly to -63.27 days, suggesting continued efficiency in converting resources into cash. However, there was a notable decrease in efficiency by December 31, 2022, with the cash conversion cycle falling to -103.57 days. This could indicate potential issues in managing working capital during that period.

Subsequently, by December 31, 2023, the company managed to reduce its cash conversion cycle to -62.88 days, showing a recovery from the previous year's decrease in efficiency. However, by December 31, 2024, there was another decline in performance, as the cash conversion cycle increased to -93.37 days.

Overall, the company has mostly maintained a negative cash conversion cycle over the past five years, indicating efficient management of working capital. However, the fluctuations observed suggest a need for continuous monitoring and optimization of the company's cash conversion process.