EQT Corporation (EQT)

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	—	136.12	105.79	78.78	80.57
Days of sales outstanding (DSO)	days	85.14	48.35	78.28	171.27	67.60
Number of days of payables	days	157.59	176.99	205.06	194.19	107.83
Cash conversion cycle	days	-72.45	7.47	-20.98	55.86	40.34

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 85.14 – 157.59
= -72.45

The cash conversion cycle is a crucial metric for evaluating a company's efficiency in managing its working capital. A shorter cash conversion cycle indicates that the company is able to convert its investments in inventory and accounts receivable back into cash more quickly.

In the case of EQT Corporation, the trend in the cash conversion cycle over the years is as follows:

- As of December 31, 2020, the cash conversion cycle was 40.34 days, indicating that it took approximately 40 days for EQT Corporation to convert its inventory and accounts receivable into cash.
- By December 31, 2021, the cash conversion cycle increased to 55.86 days, suggesting a slowdown in the company's ability to efficiently convert its working capital into cash.
- Surprisingly, by December 31, 2022, the cash conversion cycle turned negative at -20.98 days, implying that EQT Corporation was able to convert its working capital into cash at a faster pace than before. A negative cash conversion cycle can indicate that the company is receiving cash from customers before having to pay its suppliers.
- As of December 31, 2023, the cash conversion cycle increased to 7.47 days, which is still relatively low compared to the initial values.
- By December 31, 2024, the cash conversion cycle significantly decreased to -72.45 days, implying an even more efficient management of working capital.

Overall, the cash conversion cycle for EQT Corporation has been fluctuating over the years, with periods of both improvement and deterioration. It is essential for the company to monitor and manage its working capital effectively to ensure a healthy cash flow and efficient operations.