Halliburton Company (HAL)

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	2,830.61	4,599.57	1,532.90	3,651.55	190.28
Days of sales outstanding (DSO)	days	81.39	77.06	83.37	87.46	78.49
Number of days of payables	days	2,969.35	4,486.93	1,636.73	3,639.17	127.42
Cash conversion cycle	days	-57.35	189.70	-20.47	99.84	141.35

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 2,830.61 + 81.39 – 2,969.35
= -57.35

The cash conversion cycle (CCC) of Halliburton Company has experienced fluctuations over the years as per the provided data.

1. In December 2020, the CCC was 141.35 days, indicating that it took the company 141.35 days to convert its investments in inventory and accounts receivable into cash inflows.

2. By December 2021, the CCC had improved to 99.84 days, suggesting that Halliburton was able to manage its working capital more efficiently, leading to a shorter cycle.

3. Surprisingly, by December 2022, the CCC turned negative at -20.47 days. A negative CCC implies that the company was able to convert its investments into cash inflows even before paying its suppliers, which can be a positive sign of strong liquidity management.

4. However, the cycle extended significantly in December 2023 to 189.70 days, indicating a possible delay in converting working capital investments into cash flows, potentially impacting liquidity.

5. Subsequently, by December 2024, the CCC improved to -57.35 days, suggesting that Halliburton continued to effectively manage its working capital, leading to a negative cycle once again, where cash was received before payments were due.

In conclusion, Halliburton's cash conversion cycle has shown fluctuations over the years, with notable improvements and setbacks. The negative cycles in 2022 and 2024 may indicate efficient cash management, while the longer cycles in 2020 and 2023 suggest potential challenges in working capital management.