Dril-Quip Inc (DRQ)

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	230.23	200.39	219.47	287.64	253.71
Days of sales outstanding (DSO)	days	244.44	237.94	230.10	256.54	218.36
Number of days of payables	days	77.73	59.04	53.06	50.65	57.31
Cash conversion cycle	days	396.95	379.29	396.50	493.53	414.76

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 230.23 + 244.44 – 77.73
= 396.95

Dril-Quip, Inc.'s cash conversion cycle has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 396.95 days, which indicates the average number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales. Comparing this figure to previous years, we observe a slight increase from 2022 (379.19 days) but a decrease from 2021 (396.50 days).

The cash conversion cycle peaked in 2020 at 493.53 days, reflecting a longer period for Dril-Quip to convert its resources into cash. However, the company improved this metric in 2023 compared to 2020, suggesting more efficient working capital management. Despite the fluctuations, it is essential for the company to continue monitoring and improving its cash conversion cycle to optimize its liquidity position and operational efficiency.