DTE Energy Company (DTE)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	406.46	368.85	355.56	307.94	37.27
Days of sales outstanding (DSO)	days	1,638.46	1,475.69	41.42	44.64	53.71
Number of days of payables	days	452.82	476.28	605.44	507.48	348.28
Cash conversion cycle	days	1,592.10	1,368.25	-208.46	-154.91	-257.30

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 406.46 + 1,638.46 – 452.82
= 1,592.10

The cash conversion cycle of DTE Energy Company has shown fluctuations over the years.

As of December 31, 2020, the company's cash conversion cycle was -257.30 days, indicating that DTE Energy was able to convert its investments in inventory into cash quickly. This negative figure suggests efficient management of working capital.

By December 31, 2021, the cash conversion cycle improved further to -154.91 days, demonstrating a more streamlined process in converting sales into cash. This reduction indicates improved efficiency in managing accounts receivable and inventory turnover.

However, by December 31, 2022, the cash conversion cycle increased to -208.46 days, although still negative, signaling potential inefficiencies in working capital management compared to the previous year.

The trend took a significant negative turn by December 31, 2023, with a cash conversion cycle of 1,368.25 days, indicating a considerable delay in converting resources into cash. This sharp increase may raise concerns about liquidity management and operational efficiency within the company.

By the end of December 31, 2024, the cash conversion cycle further extended to 1,592.10 days, highlighting persistent challenges in converting investments into cash promptly. This prolonged cycle may put pressure on the company's working capital and cash flow management.

Overall, the fluctuating cash conversion cycle of DTE Energy Company suggests varying levels of effectiveness in managing its working capital and liquidity position over the years, requiring attention to improve operational efficiencies and cash flow dynamics.