NOV Inc. (NOV)
Cash conversion cycle
| Dec 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 104.81 | 114.63 | 116.55 | 120.57 | 116.30 | 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 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 104.81 | 114.63 | 116.55 | 120.57 | 116.30 | 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 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 104.81 + — – —
= 104.81
The cash conversion cycle of NOV Inc. has shown fluctuations over the period from March 31, 2020, to December 31, 2024. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
Initially, the company's cash conversion cycle was around 97 days in March 2020, indicating that it took NOV Inc. approximately 97 days to convert its investments into cash. Over the next few quarters, this cycle increased, reaching its peak at 127.20 days by September 30, 2023. This suggests that the company faced challenges in efficiently managing its working capital during this period.
However, from December 31, 2023, onwards, the cash conversion cycle started to decline, indicating potential improvements in NOV Inc.'s working capital management. By December 31, 2024, the cycle had reduced to around 104.81 days, indicating that the company was able to enhance its efficiency in converting investments into cash flows from sales.
Analyzing the cash conversion cycle provides insights into how effective NOV Inc. is at managing its cash flow, inventory levels, and accounts receivable. A shorter cash conversion cycle typically indicates better liquidity and operational efficiency, while a longer cycle may suggest inefficiencies in working capital management. It is crucial for the company to continue monitoring and optimizing its cash conversion cycle to ensure a healthy and sustainable financial position.
Peer comparison
Dec 31, 2024