California Water Service Group (CWT)

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	15.89	12.66	9.74	9.23	8.73
Days of sales outstanding (DSO)	days	55.06	49.54	54.56	47.56	69.53
Number of days of payables	days	154.60	142.10	147.85	137.61	122.27
Cash conversion cycle	days	-83.65	-79.89	-83.56	-80.82	-44.00

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 15.89 + 55.06 – 154.60
= -83.65

The cash conversion cycle of California Water Service Group has exhibited fluctuations over the past five years. The company's cash conversion cycle was most negative in 2023, reaching -109.84 days, indicating that it took on average 109.84 days to convert its investments in inventory and accounts receivable into cash flows from sales, before needing to pay its accounts payable.

The trend over the past five years shows variability in the efficiency of the company's working capital management. While there was an improvement in 2022 with a cash conversion cycle of -98.31 days, the company's cash conversion cycle increased in 2023. However, all values are negative, suggesting that the company has been able to efficiently manage its working capital and generate cash flows from operating activities within a relatively short period.

Overall, a negative cash conversion cycle indicates that California Water Service Group has been able to collect cash from customers and convert inventory into sales revenue more effectively than it takes to pay its suppliers. This not only reflects the company's efficient working capital management but also implies strong liquidity and potential financial stability.