Eversource Energy (ES)

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	33.43	84.54	75.02	83.30	63.04
Days of sales outstanding (DSO)	days	43.87	45.06	45.37	49.02	42.35
Number of days of payables	days	123.17	477.32	468.99	429.85	307.26
Cash conversion cycle	days	-45.87	-347.72	-348.59	-297.53	-201.87

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 33.43 + 43.87 – 123.17
= -45.87

The cash conversion cycle of Eversource Energy has shown an improving trend over the past five years, with decreasing values each year. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In 2023, Eversource Energy's cash conversion cycle was -45.41 days, indicating that the company on average converts its investments into cash and collects its receivables before paying its suppliers. This suggests an efficient management of working capital and a healthy cash flow position.

Comparing to the previous years, Eversource Energy has been able to further optimize its cash conversion cycle. The cycle was -74.47 days in 2022, -98.86 days in 2021, -76.42 days in 2020, and -59.44 days in 2019. The negative values signify that the company is operating with a negative cash conversion cycle, meaning it has quick access to cash and liquidity.

Overall, Eversource Energy has shown consistent improvement in its cash conversion cycle over the past five years, indicating effective management of working capital and efficient cash flow operations. This trend reflects positively on the company's financial health and operational efficiency.