Murphy Oil Corporation (MUR)
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 | 91.76 | 56.08 | 54.05 | 16.76 | 90.38 |
| Days of sales outstanding (DSO) | days | 36.29 | 36.30 | 40.98 | 48.61 | 55.05 |
| Number of days of payables | days | 753.03 | 559.42 | 621.37 | 103.29 | 714.83 |
| Cash conversion cycle | days | -624.99 | -467.03 | -526.35 | -37.91 | -569.41 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 91.76 + 36.29 – 753.03
= -624.99
The cash conversion cycle for Murphy Oil Corp. has exhibited significant fluctuations over the 5-year period. In 2023, the company's cash conversion cycle was notably negative at -2,735.15 days, indicating that it took an extended period to convert inventory and receivables into cash, but it was holding onto cash for an exceptionally long time compared to its payables cycle.
This negative cash conversion cycle trend is a substantial deviation from the previous years. In 2022, the cash conversion cycle was also negative, although to a lesser extent at -1,001.73 days. This suggests that the company was inefficient in managing its cash conversion process, with a higher focus on liquidity and working capital management.
Prior to this, in 2021, Murphy Oil exhibited a relatively short cash conversion cycle of 41.41 days, indicating the company was operating more efficiently in terms of managing its working capital. However, this improved performance was not sustained, as in the two preceding years (2020 and 2019), the company's cash conversion cycle increased to 48.93 days and 55.30 days, respectively.
Overall, the significant swings in Murphy Oil Corp.'s cash conversion cycle from negative to positive values reflect inconsistencies in the company's working capital management efficiency and effectiveness in converting its operating assets and liabilities into cash over the analyzed period. Further analysis of the underlying reasons for these fluctuations would provide deeper insights into the company's operational and financial performance.
Peer comparison
Dec 31, 2023