Now Inc (DNOW)

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	73.97	84.13	70.63	57.68	67.22
Days of sales outstanding (DSO)	days	60.44	68.11	67.99	44.61	45.78
Number of days of payables	days	58.21	67.13	66.39	37.86	36.86
Cash conversion cycle	days	76.20	85.11	72.23	64.42	76.14

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 73.97 + 60.44 – 58.21
= 76.20

The cash conversion cycle for NOW Inc has fluctuated over the past five years. It increased from 78.17 days in 2019 to 85.25 days in 2022, but then decreased to 76.33 days in 2023. This cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash inflows from sales to customers. A shorter cash conversion cycle indicates that the company is managing its working capital effectively and generating cash more quickly. However, a longer cycle may suggest inefficiencies in managing inventory, collecting receivables, or paying suppliers. NOW Inc should continue monitoring and analyzing its cash conversion cycle to optimize its working capital management and overall financial performance.