Devon Energy Corporation (DVN)

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	190.27	201.52	171.41	60.39	—
Days of sales outstanding (DSO)	days	53.93	44.16	37.36	52.00	51.64
Number of days of payables	days	1,448.35	1,604.06	2,016.88	1,036.20	105.76
Cash conversion cycle	days	-1,204.16	-1,358.38	-1,808.11	-923.80	-54.12

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 190.27 + 53.93 – 1,448.35
= -1,204.16

Devon Energy Corporation's cash conversion cycle has shown a significant fluctuation over the years. The company's cash conversion cycle was negative, indicating efficient cash management, which means the company was able to convert its inventory and receivables into cash quickly, often before having to pay its own suppliers.

In December 31, 2020, the cash conversion cycle was reported at -54.12 days, suggesting that the company had a short cash conversion cycle, indicating effective working capital management. However, as of December 31, 2021, the cash conversion cycle significantly decreased to -923.80 days, indicating a substantial improvement in the company's efficiency in converting its working capital into cash.

Remarkably, by December 31, 2022, the cash conversion cycle further decreased to -1,808.11 days, which means that the company was even more effective in managing its working capital, converting inventory and receivables into cash at an accelerated rate. This trend continued in the following years, with the cash conversion cycle remaining negative but fluctuating: -1,358.38 days as of December 31, 2023, and -1,204.16 days by December 31, 2024.

Overall, the negative values of the cash conversion cycle indicate that Devon Energy Corporation has been able to efficiently manage its working capital and convert it into cash rapidly. This efficient management can help the company improve its liquidity position and overall financial performance by optimizing cash flow and reducing the need for external financing.