Diamondback Energy Inc (FANG)
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 | 42.60 | 6.49 | 8.54 | 8.82 | 5.55 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 42.60 | 6.49 | 8.54 | 8.82 | 5.55 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 42.60 + — – —
= 42.60
Based on the provided data, the cash conversion cycle of Diamondback Energy Inc has shown some fluctuations over the years.
- As of December 31, 2020, the cash conversion cycle was 5.55 days, indicating that the company was efficient in converting its investments in inventory and accounts receivable into cash during that period.
- This trend continued into December 31, 2021, with a slight increase in the cash conversion cycle to 8.82 days. This may suggest a small delay in the company's ability to convert its assets into cash.
- By December 31, 2022, the cash conversion cycle decreased to 8.54 days, showing some improvement in the company's cash conversion efficiency compared to the previous year.
- In December 31, 2023, the cash conversion cycle further improved to 6.49 days, indicating that the company was able to manage its working capital more effectively during that period.
- However, by December 31, 2024, there was a significant spike in the cash conversion cycle to 42.60 days. This notable increase may raise concerns about the company's ability to efficiently convert its assets into cash, potentially indicating potential issues with inventory management or collection of receivables.
Overall, it is important for Diamondback Energy Inc to closely monitor its cash conversion cycle and work towards maintaining or improving efficiency in managing its working capital to ensure sustainable financial health and operational effectiveness.
Peer comparison
Dec 31, 2024