Magnolia Oil & Gas Corp (MGY)
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 | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 56.43 | 36.78 | 50.69 | 55.00 | 40.98 |
| Number of days of payables | days | 869.13 | 978.43 | 521.33 | 256.43 | 322.53 |
| Cash conversion cycle | days | -812.70 | -941.65 | -470.63 | -201.44 | -281.55 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 56.43 – 869.13
= -812.70
The cash conversion cycle of Magnolia Oil & Gas Corp has shown fluctuations over the past five years. The cycle was negative each year, indicating that the company's cash flows from operations were sufficient to cover its operating expenses and investment activities during those periods.
In 2023, the cash conversion cycle improved to -812.70 days compared to -941.65 days in 2022, suggesting that the company managed its working capital more efficiently. However, the cycle was still longer than in 2020 and 2019.
The significant improvement in 2023 can be attributed to better management of accounts receivable, inventory, and accounts payable. Operating with a negative cash conversion cycle means the company was able to collect cash from customers, convert inventory into sales, and pay off suppliers before needing to pay off its own obligations, which is a favorable position indicating efficient operations.
Overall, the trend in the cash conversion cycle indicates that Magnolia Oil & Gas Corp has been able to enhance its working capital management over the years, translating into improved cash flow efficiency.
Peer comparison
Dec 31, 2023