Northern Oil & Gas Inc (NOG)

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	—	—	62.11	71.10	28.95	—	—	—	9.44	4.27	0.56	0.65	13.86	33.31	50.77	242.51	6.63	181.67	107.99	68.98
Days of sales outstanding (DSO)	days	62.98	76.12	43.64	45.82	48.14	57.81	97.67	116.61	142.18	253.25	333.40	248.12	41.48	34.59	19.50	36.27	64.70	36.97	36.06	43.36
Number of days of payables	days	80.05	138.31	92.94	84.37	84.09	123.62	131.89	100.64	69.95	54.80	29.03	10.93	9.59	5.65	16.15	57.59	70.57	307.59	296.90	571.78
Cash conversion cycle	days	-17.07	-62.20	12.81	32.55	-7.00	-65.81	-34.23	15.97	81.67	202.72	304.93	237.85	45.76	62.26	54.12	221.19	0.76	-88.95	-152.85	-459.44

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 62.98 – 80.05
= -17.07

The cash conversion cycle measures how efficiently a company manages its working capital by assessing how long it takes for the company to convert its resources (inventory and accounts receivable) into cash.

Based on the data provided for Northern Oil and Gas Inc., the cash conversion cycle has fluctuated over the past eight quarters, ranging from 43.64 days to 245.57 days. A lower number indicates more efficient management of working capital, while a higher number suggests potential liquidity issues or inefficiencies in the company's operations.

In Q4 2023, the cash conversion cycle was 62.98 days, a decrease from the previous quarter. This indicates that Northern Oil and Gas Inc. was able to convert its resources into cash more efficiently during this period.

In contrast, in Q1 2022, the cash conversion cycle was significantly high at 245.57 days, indicating potential challenges in managing working capital effectively. However, it improved gradually over the following quarters.

Overall, it is essential for Northern Oil and Gas Inc. to continue monitoring and improving its cash conversion cycle to ensure optimal working capital management and overall financial health.