MDU Resources Group Inc (MDU)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	10.66	4.68	29.84	26.18	25.94
Days of sales outstanding (DSO)	days	73.89	87.46	60.83	57.66	57.22
Number of days of payables	days	57.97	38.31	42.59	38.33	37.58
Cash conversion cycle	days	26.57	53.83	48.09	45.51	45.57

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 10.66 + 73.89 – 57.97
= 26.57

Over the past five years, MDU Resources Group Inc has shown varying trends in its cash conversion cycle. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales of products or services.

In 2023, the cash conversion cycle decreased significantly to -92.48 days, indicating that the company was able to convert its resources into cash efficiently. This improvement may suggest effective inventory management, quicker collection of receivables, or extended payment terms with suppliers.

Comparing to the prior year, in 2022, the cash conversion cycle was -47.47 days, which was a further improvement from 2021 when it was -33.05 days. This could signal that MDU Resources Group Inc continued to enhance its working capital efficiency and might have streamlined its operational processes.

However, in 2020, the cash conversion cycle increased to -50.19 days from -32.57 days in 2019. This rise suggests that the company took longer to convert its resources into cash during that year. Factors such as increased inventory levels, slower receivables collection, or prolonged payment terms with suppliers may have contributed to this less efficient performance.

Overall, while MDU Resources Group Inc has shown fluctuations in its cash conversion cycle over the past five years, it is evident that the company has strived to manage its working capital efficiently, as reflected in the negative values which indicate a relatively quick turnaround of resources into cash.

Further investigation into the specific components of the cash conversion cycle, such as days inventory outstanding, days sales outstanding, and days payable outstanding, can provide deeper insights into the company's operational and financial performance.