Halliburton Company (HAL)
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 | 4,599.57 | 1,532.90 | 3,651.55 | 190.28 | 356.93 |
| Days of sales outstanding (DSO) | days | 77.06 | 83.37 | 87.46 | 78.49 | 74.54 |
| Number of days of payables | days | 4,486.93 | 1,636.73 | 3,639.17 | 127.42 | 276.54 |
| Cash conversion cycle | days | 189.70 | -20.47 | 99.84 | 141.35 | 154.93 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 4,599.57 + 77.06 – 4,486.93
= 189.70
Halliburton Co.'s cash conversion cycle has shown fluctuations over the past five years. The cycle measures the time taken to convert company investments in inventory and other resources into cash inflows from sales. A lower cash conversion cycle indicates a more efficient use of resources and faster conversion of investments into cash.
In 2023, the company's cash conversion cycle improved to 78.61 days compared to 78.95 days in 2022. This suggests that Halliburton Co. managed its inventory, accounts receivable, and accounts payable more efficiently, resulting in a quicker conversion of resources into cash.
However, it is important to note that the cash conversion cycle was more favorable in 2021 and 2019 compared to 2023. In 2020, there was a notable increase in the cycle to 99.56 days, indicating potential challenges in managing working capital and converting investments into cash during that period.
Overall, Halliburton Co. should aim to maintain a low and stable cash conversion cycle to ensure efficient management of its working capital and maximize cash flows from operations.
Peer comparison
Dec 31, 2023