Baker Hughes Co (BKR)

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	583.67	576.35	486.00	506.39	80.85
Days of sales outstanding (DSO)	days	94.08	101.95	106.33	102.09	102.15
Number of days of payables	days	535.13	505.86	455.38	476.61	64.59
Cash conversion cycle	days	142.62	172.44	136.94	131.87	118.41

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 583.67 + 94.08 – 535.13
= 142.62

The cash conversion cycle of Baker Hughes Co has shown a fluctuating trend over the five-year period from December 31, 2020, to December 31, 2024. Starting at 118.41 days in 2020, the cycle increased to 131.87 days in 2021, showing a slight deterioration in the company's ability to efficiently convert its investments in raw materials into cash.

However, the trend continued to worsen as the cash conversion cycle extended to 136.94 days in 2022 before reaching its highest point of 172.44 days in 2023. This significant increase indicates delays in converting the company's investments in inventory into sales and eventually into cash.

In 2024, we observed a slight improvement in the cash conversion cycle to 142.62 days, which may suggest some measures taken by the company to address the prolonged cycle and enhance its working capital management.

Overall, the increasing trend in the cash conversion cycle over the analyzed period highlights potential inefficiencies in Baker Hughes Co's inventory management, accounts receivable collection, and accounts payable payment processes. The company may need to focus on streamlining its operations to shorten the cycle and improve its cash flow efficiency in the future.