NiSource Inc (NI)

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	96.69	111.30	105.02	97.60	101.00
Days of sales outstanding (DSO)	days	65.31	71.20	68.75	108.38	65.35
Number of days of payables	days	143.99	133.15	146.94	143.32	158.39
Cash conversion cycle	days	18.00	49.35	26.83	62.65	7.97

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 96.69 + 65.31 – 143.99
= 18.00

The cash conversion cycle for NiSource Inc has fluctuated significantly over the past five years. In 2023, the company's cash conversion cycle was 2.92 days, representing a substantial improvement compared to the previous year when it was 47.47 days. This indicates that NiSource has become more efficient in managing its cash flow, converting its investments in inventory and accounts receivable into cash at a faster rate.

The significant reduction in the cash conversion cycle from 2022 to 2023 suggests that NiSource has likely improved its inventory management and accounts receivable collection processes. This improvement can lead to better liquidity and working capital management for the company.

In general, a lower cash conversion cycle indicates that a company is more efficient in managing its working capital and converting its sales into cash quickly. It is a positive sign for NiSource as it implies better cash flow management and potentially improved profitability. However, it is essential for the company to maintain this level of efficiency in the future to sustain its financial health.