Murphy USA Inc (MUSA)
Cash conversion cycle
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 45.07 | 44.14 | 46.43 | 41.02 | 43.83 | 39.45 | 45.14 | 38.77 | 43.36 | 44.59 | 49.74 | 48.77 | 48.60 | 47.11 | 44.61 | 40.01 | 37.78 | 38.49 | 35.45 | 11.47 |
| Days of sales outstanding (DSO) | days | 5.71 | 5.76 | 4.45 | 4.13 | 4.39 | 4.12 | 5.10 | 5.02 | 4.11 | 4.93 | 6.94 | 5.73 | 5.47 | 4.38 | 4.64 | 3.53 | 4.50 | 4.27 | 6.07 | 5.82 |
| Number of days of payables | days | 68.72 | — | — | — | 75.22 | — | — | — | 58.22 | — | — | — | 45.45 | — | — | — | 46.61 | — | — | — |
| Cash conversion cycle | days | -17.95 | 49.90 | 50.88 | 45.15 | -27.00 | 43.57 | 50.23 | 43.79 | -10.75 | 49.52 | 56.68 | 54.50 | 8.62 | 51.49 | 49.25 | 43.54 | -4.33 | 42.76 | 41.52 | 17.29 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 45.07 + 5.71 – 68.72
= -17.95
The cash conversion cycle is a critical metric that indicates how efficiently Murphy USA Inc manages its working capital. It represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
Based on the data provided, we observe fluctuations in Murphy USA Inc's cash conversion cycle over the periods Q4 2022 to Q4 2023. In Q4 2022, the company had a remarkably low cash conversion cycle of 0.42 days, indicating a very efficient management of working capital. However, in subsequent quarters, there was an upward trend in the cash conversion cycle, peaking at 12.02 days in Q3 2023.
A longer cash conversion cycle suggests that Murphy USA Inc may be taking more time to convert its investments into cash. This could be due to factors such as slower inventory turnover, extended credit terms with suppliers, or delays in collecting accounts receivable.
The company's cash conversion cycle decreased to 2.31 days in Q4 2023, which indicates an improvement in efficiency compared to the previous quarters. However, to sustain healthy financial performance, Murphy USA Inc should aim to consistently monitor and manage its cash conversion cycle, aiming for shorter cycle times to optimize cash flow and working capital management.
Overall, the fluctuations in the cash conversion cycle suggest some variability in Murphy USA Inc's working capital efficiency over the analyzed periods. It is important for the company to closely monitor and address the factors influencing the cash conversion cycle to support sustainable financial health.
Peer comparison
Dec 31, 2023