DTE Energy Company (DTE)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 406.46 | 484.46 | 406.95 | 368.16 | 368.85 | 409.24 | 349.00 | 302.66 | 348.36 | 409.99 | 323.06 | 266.89 | 309.15 | 308.38 | 15.96 | — | 38.75 | 341.93 | 325.97 | 288.98 |
| Days of sales outstanding (DSO) | days | 1,638.46 | 1,369.17 | 1,629.46 | 1,847.88 | 1,475.69 | 119.73 | 55.00 | 41.82 | 41.42 | 37.25 | 44.10 | 40.91 | 43.46 | 44.08 | 45.88 | 47.55 | 53.71 | 47.27 | 53.68 | 52.22 |
| Number of days of payables | days | 452.82 | 449.28 | 456.95 | 385.36 | 476.28 | 418.46 | 391.04 | 407.43 | 593.17 | 633.37 | 659.34 | 483.25 | 509.49 | 460.04 | 406.98 | 348.23 | 362.10 | 404.44 | 425.63 | 420.18 |
| Cash conversion cycle | days | 1,592.10 | 1,404.35 | 1,579.47 | 1,830.69 | 1,368.25 | 110.51 | 12.95 | -62.95 | -203.39 | -186.13 | -292.19 | -175.46 | -156.87 | -107.58 | -345.14 | -300.67 | -269.64 | -15.24 | -45.98 | -78.99 |
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 is a financial metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A negative cash conversion cycle indicates that the company is able to generate cash flows from its operational activities before paying its suppliers, which is generally considered favorable as it signifies efficient management of working capital.
Analyzing the cash conversion cycle data of DTE Energy Company from March 2020 to December 2024, we observe fluctuations in the cycle. The company maintained a consistently negative cash conversion cycle from March 2020 to June 2022, indicating efficient management of working capital during this period. However, in the following quarters from September 2022 to December 2024, the cash conversion cycle turned positive, indicating a potential delay in converting investments into cash flows from sales.
Specifically, the cash conversion cycle reached its lowest point in March 2023 at -62.95 days, representing the most efficient period in the management of working capital during the analyzed period. Conversely, by December 2024, the cash conversion cycle had significantly increased to over 1,500 days, which suggests a longer time frame for the company to convert its investments into cash flows from sales. Such a substantial increase in the cash conversion cycle could potentially indicate challenges in managing working capital efficiently and may require further examination by stakeholders.
In conclusion, the fluctuating trend of the cash conversion cycle for DTE Energy Company over the analyzed period highlights the importance of monitoring working capital management practices to ensure the company's liquidity and operational efficiency. Stakeholders should pay attention to the company's ability to maintain a negative or low cash conversion cycle to support its financial health and performance.
Peer comparison
Dec 31, 2024