Nabors Industries Ltd (NBR)
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 | 26.52 | 24.65 | 30.76 | 35.04 | 26.43 |
| Days of sales outstanding (DSO) | days | 44.55 | 50.41 | 57.12 | 63.71 | 55.61 |
| Number of days of payables | days | 52.82 | 60.51 | 61.73 | 48.21 | 44.24 |
| Cash conversion cycle | days | 18.24 | 14.56 | 26.15 | 50.54 | 37.80 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 26.52 + 44.55 – 52.82
= 18.24
The cash conversion cycle of Nabors Industries Ltd has fluctuated over the past five years. In 2023, the company's cash conversion cycle stood at 12.34 days, indicating that it takes approximately 12.34 days for the company to convert its investments in inventory and accounts receivable into cash from sales. This represents an increase from the previous year's cycle of 4.26 days, suggesting a decrease in efficiency in managing its working capital.
Comparing to the cycles in 2021, 2020, and 2019, where the company had longer cash conversion cycles of 15.92 days, 45.56 days, and 31.86 days respectively, the trend appears to show improvements in the company's working capital management over the last three years.
A shorter cash conversion cycle is generally considered positive as it indicates that the company is able to quickly convert its investments in inventory and accounts receivable into cash, which can improve liquidity and financial performance. It is essential for Nabors Industries Ltd to continue monitoring and managing its cash conversion cycle effectively to sustain its operational efficiency and financial health.
Peer comparison
Dec 31, 2023