H2O America (HTO)

The analysis of H2O America's cash conversion cycle (CCC) over the specified period demonstrates notable fluctuations and an overall trend toward greater efficiency in managing working capital.

As of December 31, 2020, the CCC stood at approximately 16.31 days, indicating the time elapsed between cash outflows for inventory and cash inflows from sales was relatively moderate. In the subsequent year, 2021, the CCC increased to about 23.18 days, reflecting a lengthening of the cycle by roughly 6.87 days. This could suggest delays in collection periods or extended inventory holding times during that period.

In 2022, the CCC further grew marginally to approximately 23.98 days, signifying a stabilization at a higher level and potentially indicating persistent challenges in receivables collection or inventory turnover rates. However, a significant turnaround was observed in 2023, with the CCC decreasing markedly to about 9.05 days. This reduction indicates a substantial improvement in the company's efficiency, possibly resulting from optimized receivables collection, improved inventory management, or streamlined supply chain processes.

The trend continued into 2024, with the CCC further declining to approximately 6.01 days. This ongoing reduction emphasizes sustained improvements in operational efficiency and shorter cash conversion periods, likely enhancing liquidity and reducing working capital requirements.

Overall, the progression from a CCC of 16.31 days in 2020 to just 6.01 days in 2024 reflects a significant enhancement in H2O America’s cash flow management. The substantial decrease from previous levels suggests that the company has implemented effective strategies to accelerate receivables collections, reduce inventory holding periods, or both. This transition towards a shorter cash conversion cycle indicates improved operational efficiency and better liquidity management over the analyzed period.

Peer comparison

Dec 31, 2024