Marathon Petroleum Corp (MPC)

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	25.78	20.81	26.01	37.60	31.04
Days of sales outstanding (DSO)	days	28.64	27.87	33.71	30.61	23.18
Number of days of payables	days	38.08	36.09	44.25	36.68	35.53
Cash conversion cycle	days	16.34	12.58	15.48	31.53	18.69

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 25.78 + 28.64 – 38.08
= 16.34

The cash conversion cycle for Marathon Petroleum Corp has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 15.78 days, which represents the number of days it takes for the company to convert its investments in inventory and other resources into cash inflows from sales. This indicates that in 2023, Marathon Petroleum Corp was able to efficiently manage its inventory, accounts receivable, and accounts payable to generate cash within a relatively short timeframe.

Compared to the prior year, there was a slight increase in the cash conversion cycle from 11.99 days in 2022 to 15.78 days in 2023. Although the increase suggests a potential slowdown in cash conversion efficiency, it is important to assess the reasons behind this change, such as changes in inventory levels, sales patterns, or payment terms with suppliers and customers.

Looking further back, the cash conversion cycle in 2023 was lower than in 2020 when it stood at 31.17 days, indicating improvements in cash flow management over the years. However, the cycle was higher in 2023 compared to 2019 when it was 18.58 days, suggesting some variability in the company's ability to efficiently convert its resources into cash during these years.

Overall, the trend in Marathon Petroleum Corp's cash conversion cycle shows fluctuations over the past five years, with the company experiencing both improvements and setbacks in managing its working capital effectively. Analyzing the components of the cash conversion cycle in detail can provide further insights into the company's operational efficiency and financial health.