NOV Inc. (NOV)

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	116.31	127.20	126.64	121.43	112.10	114.63	111.18	105.31	102.28	100.17	98.14	97.31	90.86	103.26	102.07	97.47	105.04	119.98	139.02	159.06
Days of sales outstanding (DSO)	days	81.01	87.02	86.09	84.73	87.71	88.67	94.15	91.83	87.29	87.59	85.40	84.63	76.36	71.61	70.41	81.43	79.85	76.39	83.50	76.12
Number of days of payables	days	48.88	51.67	57.99	57.31	56.02	50.56	52.69	47.02	47.03	39.24	39.05	33.49	31.56	28.17	29.42	31.76	34.19	33.86	33.81	34.49
Cash conversion cycle	days	148.44	162.55	154.74	148.84	143.79	152.75	152.64	150.12	142.53	148.52	144.48	148.45	135.66	146.71	143.06	147.15	150.71	162.51	188.71	200.68

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 116.31 + 81.01 – 48.88
= 148.44

NOV Inc's cash conversion cycle measures the time it takes for the company to convert its investments in inventory and accounts receivable into cash flow from sales. The trend in NOV Inc's cash conversion cycle over the past eight quarters has shown some fluctuations. In Q4 2023, the cash conversion cycle decreased to 148.44 days compared to the previous quarter, indicating an improvement in the company's efficiency in managing its working capital.

However, this improvement followed a trend of increasing cash conversion cycles in the three preceding quarters, with Q3 2023 showing the highest value of 162.55 days during the period under review. This suggests that NOV Inc faced challenges in managing its inventory and receivables efficiently in those quarters, resulting in a longer cash conversion cycle.

Comparing the Q4 2023 value to the same quarter in the previous year, the cash conversion cycle increased slightly from 143.79 days to 148.44 days. This indicates that NOV Inc may have faced some difficulties in converting its investments into cash in Q4 2023 compared to the same period the previous year.

Overall, NOV Inc should continue to monitor and manage its cash conversion cycle effectively to ensure it maintains optimal levels of working capital efficiency and liquidity.