CMS Energy Corporation (CMS)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	244.71	289.12	260.62	228.38	326.07	369.18	271.15	201.21	304.94	362.50	261.60	157.52	238.92	271.96	209.74	170.17	251.18	292.27	226.06	181.87
Days of sales outstanding (DSO)	days	27.25	18.02	20.85	22.29	23.14	13.82	13.99	63.04	95.24	67.48	63.05	73.24	71.17	55.61	60.18	83.09	90.65	52.95	57.11	63.71
Number of days of payables	days	—	—	—	—	—	—	—	188.18	253.34	263.81	280.48	238.36	313.42	281.62	256.43	224.94	288.25	302.79	281.01	205.34
Cash conversion cycle	days	271.96	307.14	281.47	250.66	349.20	383.00	285.14	76.06	146.84	166.17	44.17	-7.60	-3.34	45.95	13.49	28.32	53.59	42.43	2.16	40.25

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 244.71 + 27.25 – —
= 271.96

The cash conversion cycle of CMS Energy Corporation has shown significant fluctuations over the past few years. In March 2020, the company had a cash conversion cycle of 40.25 days, indicating that it took approximately 40 days to convert inventory or resources into cash. This number decreased significantly to 2.16 days by June 2020, suggesting a more efficient cash conversion process.

However, the cycle lengthened again in September 2020 to 42.43 days and increased further to 53.59 days by December 2020. This trend reversed in March 2021, with the cycle decreasing to 28.32 days and dropping even lower to 13.49 days by June 2021, indicating improved efficiency in cash conversion.

The cycle turned negative in December 2021 (-3.34 days) and March 2022 (-7.60 days), suggesting that CMS Energy was able to collect cash before paying its suppliers. This negative cycle was not sustained, as the cycle increased to 44.17 days by June 2022 and continued to rise significantly to 383.00 days by September 2023.

The exceptionally high cycle length in September 2023 was likely due to delays in cash collections or increased time taken to convert resources into cash. The cycle decreased to 271.96 days by December 2024, but remained at a significant level.

Overall, the cash conversion cycle of CMS Energy Corporation has shown fluctuations and periods of inefficiency, which could impact its liquidity and working capital management. Further analysis would be needed to understand the specific factors driving these fluctuations and to recommend potential improvements in the company's cash conversion processes.