National Fuel Gas Company (NFG)

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	62.04	53.38	37.56	29.80	41.53	51.16	38.64	45.75	74.48	109.08	84.99	72.56	86.25	124.09	91.30	86.80	192.38	199.15	148.97	124.30
Days of sales outstanding (DSO)	days	1.99	—	—	1.87	6.86	—	—	1.47	4.19	—	—	0.58	4.64	—	—	3.47	35.22	30.17	38.63	51.34
Number of days of payables	days	87.66	99.69	56.22	68.79	103.80	125.40	108.06	112.56	138.02	214.66	145.70	134.35	117.16	195.32	130.69	162.92	347.18	340.40	299.57	395.83
Cash conversion cycle	days	-23.63	-46.31	-18.66	-37.12	-55.41	-74.24	-69.41	-65.34	-59.35	-105.58	-60.71	-61.20	-26.27	-71.23	-39.39	-72.65	-119.58	-111.08	-111.97	-220.19

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 62.04 + 1.99 – 87.66
= -23.63

The cash conversion cycle of National Fuel Gas Co. fluctuated significantly over the past few quarters. In Q1 2024, the company took 11.00 days to convert its investments in inventory into cash from sales. This indicates that the company had a positive cash conversion cycle, meaning it took longer to convert inventory into cash. The improved performance compared to the previous quarter (Q4 2023) where the company had a negative cash conversion cycle of -26.50 days, suggests better management of inventory and accounts receivable.

In Q3 2023, the cash conversion cycle was 9.53 days, showing a relatively efficient conversion of inventory and receivables into cash. In Q2 2023, the cycle was 2.10 days, indicating a further improvement in efficiency. However, in Q1 2023, the cycle was -12.34 days, suggesting that the company was able to convert investments into cash at a faster rate than generating them, potentially signaling aggressive sales tactics or quick payment collection.

Looking back at Q4 2022, the company experienced a significantly negative cash conversion cycle of -32.23 days, indicating a potentially risky financial position where the company was generating cash before outlaying funds in inventory and receivables. This trend reversed in the subsequent quarters, highlighting the business's volatility in managing its cash flow.

Overall, fluctuations in the cash conversion cycle of National Fuel Gas Co. over the periods analyzed may reflect changes in sales patterns, inventory management, and accounts receivable practices. Investors and analysts should closely monitor these trends to assess the company's efficiency in generating cash from its operations.