Matador Resources Company (MTDR)

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	44.82	61.06	25.52	44.00	5.14
Days of sales outstanding (DSO)	days	68.18	61.50	54.17	52.99	58.06
Number of days of payables	days	171.42	99.58	98.91	94.79	6.79
Cash conversion cycle	days	-58.42	22.98	-19.22	2.20	56.41

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 44.82 + 68.18 – 171.42
= -58.42

The cash conversion cycle is a crucial measure of efficiency in managing cash flows within a company's operations. Matador Resources Company's cash conversion cycle has shown varying trends over the past five years.

In December 31, 2020, the company had a cash conversion cycle of 56.41 days, indicating that it took around 56 days for the company to convert its investments in inventory and other resources into cash receipts from sales.

By December 31, 2021, the company significantly improved its cash conversion cycle to 2.20 days, suggesting a more efficient management of working capital and quicker conversion of inventory into cash.

In December 31, 2022, the company achieved a negative cash conversion cycle of -19.22 days, implying that the company was able to receive cash from its sales before paying its suppliers for inventory, which could be a sign of strong bargaining power or effective inventory management.

However, by December 31, 2023, the cash conversion cycle increased to 22.98 days, indicating a slight delay in the conversion process compared to the previous year.

In December 31, 2024, the company's cash conversion cycle decreased significantly to -58.42 days, implying that Matador Resources Company was able to efficiently convert its investments in inventory back to cash, even before paying suppliers, which could indicate improved cash flow management and operational efficiency during that period.

Overall, the trend in Matador Resources Company's cash conversion cycle over the years showcases fluctuations in working capital management efficiency, with notable improvements and occasional setbacks. Further analysis would be required to understand the specific factors driving these changes and their implications for the company's financial health and operational performance.