Baker Hughes Co (BKR)

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	576.35	486.00	506.39	80.85	475.25
Days of sales outstanding (DSO)	days	101.95	106.33	102.09	102.15	99.81
Number of days of payables	days	505.86	455.38	476.61	64.59	440.19
Cash conversion cycle	days	172.44	136.94	131.87	118.41	134.88

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 576.35 + 101.95 – 505.86
= 172.44

The cash conversion cycle of Baker Hughes Co has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 112.47 days from 109.09 days in 2022. This suggests that Baker Hughes took slightly longer to convert its investments in inventory and receivables into cash receipts in 2023 compared to the previous year.

Looking back, in 2021, the cash conversion cycle was 105.80 days, which was lower than in 2020 when it was 117.64 days. This indicates an improvement in the efficiency of Baker Hughes in managing its working capital in 2021. Notably, in 2019, the cash conversion cycle was 104.63 days, indicating a slightly shorter cycle compared to the most recent years.

Overall, the trend in Baker Hughes Co's cash conversion cycle shows some variability, with fluctuations from year to year. A longer cash conversion cycle may indicate inefficiencies in managing working capital, while a shorter cycle may suggest better efficiency in converting investments into cash. Further analysis of the company's operating and financial activities may provide insights into the factors influencing these fluctuations in the cash conversion cycle.