MDU Resources Group Inc (MDU)

Cash conversion cycle

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	9.66	7.61	4.72	29.87	4.68	6.87	4.19	33.04	29.84	27.84	28.19	28.55	26.18	25.79	27.31	27.65	25.93	27.51	33.24	33.09
Days of sales outstanding (DSO)	days	69.31	42.42	44.37	62.01	53.34	63.69	50.89	58.96	60.83	63.61	58.66	51.48	57.66	66.68	61.08	56.03	57.22	68.38	66.54	56.73
Number of days of payables	days	52.55	39.33	31.31	38.38	38.31	34.59	32.42	39.08	42.59	46.87	38.48	34.20	38.33	39.36	39.08	34.73	37.57	36.39	36.31	37.40
Cash conversion cycle	days	26.43	10.71	17.78	53.50	19.71	35.97	22.67	52.92	48.09	44.58	48.36	45.83	45.51	53.11	49.31	48.94	45.58	59.50	63.47	52.41

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 9.66 + 69.31 – 52.55
= 26.43

The cash conversion cycle of MDU Resources Group Inc has shown significant fluctuations over the past eight quarters. The cash conversion cycle is a measure of how long it takes for a company to convert its investments in inventory, accounts receivable, and accounts payable into cash flows from sales.

In Q4 2023, the company had a negative cash conversion cycle of -92.48 days, indicating that it was able to convert its investments into cash more efficiently than in the previous quarters. This was a significant improvement from Q3 2023, when the cash conversion cycle was -70.64 days. However, this improvement was not sustained, as the cash conversion cycle deteriorated in Q2 2023 to -79.08 days.

The most notable observation is the positive cash conversion cycle in Q1 2023, where the company took 18.10 days to convert its investments into cash. This indicates that the company faced challenges in managing its working capital efficiently during that quarter.

Comparing to the same quarter last year (Q4 2022), the company improved its cash conversion cycle from -47.47 days to -92.48 days in Q4 2023, reflecting a better overall performance in converting investments into cash.

Overall, the cash conversion cycle of MDU Resources Group Inc has been volatile, with fluctuations in efficiency in managing working capital over the quarters. It is essential for the company to focus on optimizing the management of inventory, accounts receivable, and accounts payable to maintain a more stable and efficient cash conversion cycle.