Liberty Oilfield Services Inc (LBRT)

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 21.41 20.61 21.52 21.96 20.93 20.94 19.80 20.11 23.47 22.12 21.61 19.92 20.66 21.71 29.25 44.40 44.95 26.10 21.71 18.82
Days of sales outstanding (DSO) days 15.67 15.03 18.37 17.56 14.52 15.51 15.13 57.90 51.55 69.93 67.00 69.27 60.19 77.56 108.01 119.01 127.99 47.65 16.97 63.55
Number of days of payables days 33.05 36.20 36.32 33.04 29.87 35.46 36.32 42.18 35.77 45.09 41.12 47.56 44.33 42.56 44.58 63.44 73.30 23.73 7.32 23.23
Cash conversion cycle days 4.02 -0.57 3.58 6.49 5.59 0.99 -1.38 35.83 39.25 46.96 47.49 41.63 36.52 56.71 92.69 99.97 99.64 50.02 31.35 59.15

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 fluctuations over the period analyzed. It measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to June 30, 2020, there was a significant reduction in the cash conversion cycle, indicating improved efficiency in managing working capital. The cycle continued to decrease through September 30, 2020, before increasing sharply by year-end 2020, possibly indicating challenges in managing cash flow during that period.

The cycle remained high in the first half of 2021, signifying prolonged cash conversion times. However, there was a substantial improvement by December 31, 2021, with the cycle reducing significantly, possibly due to more efficient management of inventory and accounts receivable.

By the first half of 2022, the cycle continued to improve, suggesting enhanced working capital management practices. The positive trend continued with further reductions by September 30, 2022, and December 31, 2022.

By March 31, 2023, the cash conversion cycle had decreased significantly to only 35.83 days, indicating potential improvements in cash flow efficiency. However, the cycle unexpectedly became negative by June 30, 2023, and September 30, 2023, which suggests that the company may be effectively operating with negative working capital during those periods.

From December 31, 2023, to December 31, 2024, the cash conversion cycle remained relatively stable at low levels, indicating efficient working capital management and potentially rapid conversion of inventory and accounts receivable into cash during the respective quarters.

Overall, the analysis of Liberty Oilfield Services Inc's cash conversion cycle highlights the company's efforts to optimize working capital efficiency, with fluctuations observed over the period but generally showing a trend towards more effective management of cash flow and resources.