Liberty Oilfield Services Inc (LBRT)
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 | 21.41 | 20.93 | 23.47 | 20.65 | 45.55 |
| Days of sales outstanding (DSO) | days | 15.67 | 14.52 | 51.55 | 60.19 | 127.99 |
| Number of days of payables | days | 33.05 | 29.87 | 35.77 | 44.31 | 74.27 |
| Cash conversion cycle | days | 4.02 | 5.59 | 39.25 | 36.53 | 99.27 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 21.41 + 15.67 – 33.05
= 4.02
The cash conversion cycle of Liberty Oilfield Services Inc has shown a significant improvement over the years. In 2020, the company's cash conversion cycle was 99.27 days, reflecting a relatively long period for converting its investments in inventory and other resources into cash inflows. However, by the end of 2024, the cash conversion cycle had decreased substantially to just 4.02 days. This indicates that the company has become more efficient in managing its working capital and turning its investments into cash quickly.
The decreasing trend in the cash conversion cycle suggests that Liberty Oilfield Services Inc has been able to streamline its operations, reduce the time taken to sell its products or services, and efficiently manage its accounts payable and accounts receivable. A shorter cash conversion cycle generally indicates improved liquidity and better financial health for the company, as it means the company is able to generate cash flows more rapidly.
Overall, the improving cash conversion cycle of Liberty Oilfield Services Inc from 2020 to 2024 signifies enhanced operational efficiency and effective working capital management, which can contribute to the company's financial stability and growth in the long term.
Peer comparison
Dec 31, 2024