Chesapeake Energy Corp (CHK)

Cash conversion cycle

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	1,753.48	2,176.31	1,043.77	2,938.99	2,036.43	155.32	30.65	27.86	42.58	20.40	17.30	83.16	0.78	—	—	36.41	130.78	337.69	261.21	—
Days of sales outstanding (DSO)	days	24.82	22.94	19.52	22.24	44.70	59.92	78.10	90.08	73.34	79.92	64.88	71.26	51.85	41.69	26.58	31.17	42.04	37.69	38.03	44.99
Number of days of payables	days	1,048.14	1,231.88	1,370.35	1,331.30	1,342.04	1,395.28	1,153.51	1,042.06	936.83	582.64	486.09	399.65	14.20	12.94	1.60	22.73	486.02	653.03	712.51	725.17
Cash conversion cycle	days	730.16	967.38	-307.06	1,629.93	739.09	-1,180.05	-1,044.76	-924.12	-820.91	-482.31	-403.92	-245.23	38.44	28.75	24.98	44.84	-313.20	-277.65	-413.26	-680.18

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 1,753.48 + 24.82 – 1,048.14
= 730.16

The cash conversion cycle of Chesapeake Energy Corp has been fluctuating significantly over the periods presented. The company's cash conversion cycle is a measure of how long it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

In analyzing the data, we observe that the cash conversion cycle was consistently negative or significantly low in the most recent periods, indicating that the company was able to convert its investments in inventory and accounts receivable into cash quickly during those periods.

However, in earlier periods, the cash conversion cycle was positive, indicating that the company took longer to convert its investments into cash and had less efficient cash flow management.

It is worth noting that a negative or lower cash conversion cycle is generally considered favorable as it implies more efficient operations and better management of working capital. Conversely, a positive or higher cash conversion cycle may suggest inefficiencies in managing cash flow and working capital.

Overall, the trend in Chesapeake Energy Corp's cash conversion cycle indicates improvements in efficiency and effectiveness in managing working capital, particularly in recent periods.