Dominion Energy Inc (D)

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	121.86	91.90	154.71	101.21	107.46
Days of sales outstanding (DSO)	days	88.99	116.72	87.49	92.90	89.75
Number of days of payables	days	87.61	69.94	113.54	61.64	68.03
Cash conversion cycle	days	123.23	138.67	128.65	132.47	129.18

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 121.86 + 88.99 – 87.61
= 123.23

The cash conversion cycle of Dominion Energy Inc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle significantly increased to 129.97 days compared to the previous year's 64.80 days. This signifies that in 2023, Dominion Energy took longer to convert its investments in inventories and accounts receivable into cash receipts from sales.

The increase in the cash conversion cycle in 2023 could be attributed to factors such as changes in inventory management, collection periods from customers, or the timing of payments to suppliers. A longer cash conversion cycle may indicate inefficiencies in working capital management, potentially tying up more cash in operations.

Comparing to the previous years, 2020 had the longest cash conversion cycle of 134.02 days, while 2019 had the shortest at 108.42 days. This suggests that Dominion Energy has experienced fluctuations in its efficiency in managing cash flow from operational activities over the years.

Overall, tracking the cash conversion cycle is vital for assessing a company's liquidity, operational efficiency, and working capital management. Dominion Energy Inc should focus on optimizing its cash conversion cycle to ensure smoother cash flows and efficient utilization of resources.