Matador Resources Company (MTDR)

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	61.06	25.52	44.00	5.14	46.31
Days of sales outstanding (DSO)	days	61.50	54.17	52.99	58.06	70.28
Number of days of payables	days	99.58	98.91	94.79	6.79	108.76
Cash conversion cycle	days	22.98	-19.22	2.20	56.41	7.84

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 61.06 + 61.50 – 99.58
= 22.98

The cash conversion cycle of Matador Resources Co has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 67.81 days from 57.01 days in 2022, indicating a longer period to convert its investments in inventory into cash. This could suggest that Matador Resources Co is taking more time to sell its inventory and collect cash from customers.

Comparing this to 2021, where the cash conversion cycle was 51.82 days, there has been a notable increase. This may raise concerns about the efficiency of the company's working capital management. However, in 2020, the cycle was also relatively high at 67.23 days, which indicates that this fluctuation is not unprecedented for the company.

In 2019, the longest cash conversion cycle of 77.48 days was observed, which may suggest historical inefficiencies in managing the company's operating cycle. It is important for Matador Resources Co to monitor and improve its inventory turnover, accounts receivable collection, and accounts payable payment processes to shorten its cash conversion cycle and enhance overall liquidity and working capital efficiency.