Middlesex Water Company (MSEX)

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 42.72 21.93 46.64 45.31 46.21
Days of sales outstanding (DSO) days 56.32 60.30 55.89 60.75 58.95
Number of days of payables days 178.33 86.87 187.62 178.66 275.21
Cash conversion cycle days -79.29 -4.64 -85.09 -72.59 -170.05

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 42.72 + 56.32 – 178.33
= -79.29

Middlesex Water Company's cash conversion cycle has shown fluctuations over the past five years. In December 2020, the company had a negative cash conversion cycle of -170.05 days, indicating that it was efficient in converting its investments in raw materials into cash receipts from sales. However, by December 2023, the cash conversion cycle had improved significantly to -4.64 days, suggesting a further enhancement in the efficiency of the company's working capital management.

Although there was a slight increase in the cash conversion cycle to -72.59 days by December 2021, it remained negative, indicating that the company continued to efficiently manage its cash flows. Subsequently, by December 2024, the cash conversion cycle decreased to -79.29 days, further showcasing the company's ability to convert its resources into cash effectively.

Overall, Middlesex Water Company has demonstrated strong working capital management practices, reflected in its consistently negative cash conversion cycle over the years, suggesting efficient cash flow conversion and operational performance.