NewJersey Resources Corporation (NJR)

Cash conversion cycle

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Days of inventory on hand (DOH)	days	4,768.38	4,857.58	6,381.11	756.76	5,916.26
Days of sales outstanding (DSO)	days	18.14	14.41	17.51	21.38	16.61
Number of days of payables	days	3,396.18	3,255.00	3,398.85	793.44	4,455.06
Cash conversion cycle	days	1,390.34	1,616.99	2,999.77	-15.29	1,477.81

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 4,768.38 + 18.14 – 3,396.18
= 1,390.34

The cash conversion cycle of NewJersey Resources Corporation has fluctuated significantly over the past five years. In 2024, the company's cash conversion cycle decreased to 1,390.34 days compared to the previous year, indicating an improvement in the efficiency of its working capital management.

The significant improvement in the cash conversion cycle from 2022 to 2023, where it decreased from 2,999.77 days to 1,616.99 days, suggests that the company was able to manage its cash flow and working capital more effectively during that period.

The negative cash conversion cycle in 2021 implies that the company was able to collect cash from its customers faster than it paid its suppliers and converted inventory into sales, resulting in a favorable working capital position during that year.

However, in 2020, the cash conversion cycle increased to 1,477.81 days, indicating a potential inefficiency in working capital management compared to the preceding year.

Overall, NewJersey Resources Corporation's cash conversion cycle has shown fluctuations, with improvements in certain years and potential challenges in others, highlighting the importance of closely monitoring working capital efficiency to ensure optimal financial performance.