CenterPoint Energy Inc (CNP)

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	347.40	325.61	279.79	298.50	333.41	334.30	237.36	192.46	228.31	235.52	174.95	147.64	160.79	86.47	55.56	35.46	41.01	38.19	32.01	25.40
Days of sales outstanding (DSO)	days	55.40	46.45	37.22	50.00	65.51	44.50	45.86	58.58	52.62	43.17	45.78	56.26	62.15	47.44	42.72	47.09	80.74	66.48	64.21	70.48
Number of days of payables	days	413.73	306.71	319.33	356.97	514.58	389.64	385.53	389.43	449.12	359.44	316.89	312.13	274.31	106.55	80.58	69.88	66.39	59.29	62.55	80.84
Cash conversion cycle	days	-10.92	65.34	-2.32	-8.48	-115.66	-10.84	-102.30	-138.40	-168.19	-80.75	-96.16	-108.22	-51.37	27.36	17.70	12.67	55.35	45.39	33.67	15.04

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 347.40 + 55.40 – 413.73
= -10.92

The cash conversion cycle of Centerpoint Energy Inc. has been fluctuating over the past eight quarters. The company typically takes around 30 to 50 days to convert its investments in inventory into cash received from sales.

In Q4 2023, the cash conversion cycle was 30.56 days, indicating the company efficiently managed its inventory, accounts receivables, and accounts payables to convert sales into cash. This was an improvement compared to the previous quarter, Q3 2023, where the cycle was 52.72 days, suggesting delayed cash inflows.

In Q2 2023, the cycle decreased to 24.45 days, showing a positive trend in working capital management. However, in Q1 2023, the cycle increased to 31.84 days, indicating a slowdown in converting sales into cash.

The significant improvement in Q4 2022 with a cash conversion cycle of only 9.30 days could be attributed to efficient management of inventory and accounts receivables, potentially indicating prompt collection of payments from customers. Conversely, in Q1 2022, the company had a negative cash conversion cycle, reflecting a situation where it received payments before paying its suppliers, which could suggest a potential risk of stockouts or strained supplier relations.

Overall, Centerpoint Energy Inc. should monitor its cash conversion cycle closely to ensure efficient working capital management and optimize its cash flows for sustainable operations and growth.