Kinder Morgan Inc (KMI)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Days of inventory on hand (DOH)	days	38.52	35.14	33.69	34.49	32.56	31.46	26.40	22.48	22.62	21.99	23.49	24.02	22.55	26.40	26.80	29.01	35.83	34.37	35.09	29.16
Days of sales outstanding (DSO)	days	36.40	30.47	30.73	33.52	37.80	34.53	27.34	25.65	35.78	35.89	42.56	38.64	36.32	34.19	35.90	37.68	41.80	34.92	32.02	33.59
Number of days of payables	days	96.82	83.92	75.53	67.60	84.71	79.61	52.98	41.49	51.51	48.57	57.57	48.93	50.52	68.68	64.22	72.19	86.18	83.93	72.90	71.42
Cash conversion cycle	days	-21.90	-18.30	-11.12	0.41	-14.35	-13.62	0.75	6.65	6.88	9.32	8.48	13.72	8.36	-8.10	-1.52	-5.51	-8.54	-14.64	-5.79	-8.67

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 38.52 + 36.40 – 96.82
= -21.90

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A negative cash conversion cycle indicates the company is able to collect cash from customers before paying its suppliers, which can be advantageous for working capital management.

Analyzing Kinder Morgan Inc's cash conversion cycle over the past few years, we observe fluctuations in the efficiency of the company's cash conversion process. From March 2020 to June 2021, the company consistently maintained negative cash conversion cycles, showing its ability to operate with short cash cycles and efficiently manage its working capital.

However, between December 2021 and June 2022, there was a shift to positive cash conversion cycles, indicating a slowdown in the company's ability to collect cash from sales relative to its payment of expenses. This trend continued until September 2023 when the cycle turned negative again, although it remained relatively higher compared to the earlier periods.

Interestingly, from March 2024 onwards, the cash conversion cycle fluctuated between positive and negative values, indicating possible changes in the company's cash management practices or operating dynamics.

Overall, monitoring the cash conversion cycle can provide insights into Kinder Morgan Inc's liquidity management and efficiency in converting investments into cash inflows. Tracking these trends can help assess the company's financial health and operational effectiveness over time.