NewJersey Resources Corporation (NJR)

Cash conversion cycle

		Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	4,768.38	3,502.92	2,380.26	4,803.67	4,857.58	3,974.41	2,331.86	5,959.41	6,381.11	883.40	173.47	513.58	415.77	514.82	2,939.99	5,663.07	5,916.26	—	—	—
Days of sales outstanding (DSO)	days	18.63	22.56	41.73	42.21	14.41	12.04	20.83	37.73	17.51	22.83	28.95	30.52	21.38	18.02	25.77	28.74	16.61	27.03	40.16	47.90
Number of days of payables	days	3,396.18	3,090.38	2,718.03	2,259.37	3,255.00	2,613.87	2,617.03	2,385.43	3,398.85	506.29	242.40	329.66	435.92	573.67	3,959.26	3,434.69	4,455.06	—	—	—
Cash conversion cycle	days	1,390.84	435.09	-296.04	2,586.51	1,616.99	1,372.59	-264.35	3,611.71	2,999.77	399.94	-39.99	214.44	1.23	-40.83	-993.50	2,257.11	1,477.81	27.03	40.16	47.90

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 4,768.38 + 18.63 – 3,396.18
= 1,390.84

The cash conversion cycle measures the time it takes for a company like NewJersey Resources Corporation to convert its investments in inventory and other resources into cash flows from its customers. A longer cash conversion cycle signifies that the company takes a longer time to generate cash from its operations.

Looking at the historical data provided, NewJersey Resources Corporation's cash conversion cycle has exhibited significant variability over the past few years. In some periods, such as December 2022 and December 2023, the company had extremely long cash conversion cycles of 3,611.71 days and 2,586.51 days, respectively. This could be indicative of challenges in efficiently managing inventory and collecting payments from customers in a timely manner, resulting in a prolonged cash conversion process.

Conversely, there were periods where the company managed to have negative cash conversion cycles, such as March 2021 and March 2022. A negative cash conversion cycle implies that the company is able to generate cash before needing to pay its suppliers, potentially indicating effective inventory management and prompt collection of receivables.

Overall, NewJersey Resources Corporation's cash conversion cycle has exhibited fluctuations over time, suggesting potential inefficiencies in working capital management that may require attention. Further analysis and comparison with industry benchmarks could provide insights into the company's liquidity and operational efficiency.