MGE Energy Inc (MGEE)
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 | 958.14 | 1,161.83 | 1,387.29 | 970.84 | 934.55 |
| Days of sales outstanding (DSO) | days | 52.40 | 50.50 | 56.15 | 58.43 | 51.63 |
| Number of days of payables | days | 1,097.25 | 1,046.73 | 1,108.22 | 1,198.59 | 1,080.41 |
| Cash conversion cycle | days | -86.71 | 165.60 | 335.21 | -169.31 | -94.23 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 958.14 + 52.40 – 1,097.25
= -86.71
The cash conversion cycle for MGE Energy Inc has displayed significant fluctuations over the past five years.
In December 2020, MGE Energy Inc had a negative cash conversion cycle of -94.23 days, indicating that the company was efficiently managing its working capital and converting inventory into cash quickly.
By December 2021, the cash conversion cycle deteriorated further to -169.31 days, suggesting that MGE Energy Inc was taking more time to collect cash from its sales relative to its payment obligations.
However, in December 2022, there was a notable reversal, with the cash conversion cycle skyrocketing to 335.21 days. This sharp increase indicates potential inefficiencies in managing working capital and converting sales into cash.
In December 2023, while the cash conversion cycle improved to 165.60 days, it still remained elevated compared to the earlier years, indicating ongoing challenges or adjustments in working capital management.
Finally, by December 2024, the cash conversion cycle reverted to a negative figure of -86.71 days, suggesting a potential improvement in the company's ability to efficiently convert inventory and receivables into cash.
Overall, the fluctuating trends in MGE Energy Inc's cash conversion cycle imply varying levels of efficiency in managing its working capital and liquidity position over the years. Further analysis and monitoring may be necessary to understand the underlying factors driving these fluctuations and to ensure optimal cash flow management in the future.