NRG Energy Inc. (NRG)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 7.89 | 8.35 | 9.99 | 8.87 | 18.25 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 7.89 | 8.35 | 9.99 | 8.87 | 18.25 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 7.89 + — – —
= 7.89
The cash conversion cycle of NRG Energy Inc. has shown a favorable trend over the years, indicating efficient management of its working capital.
As of December 31, 2020, the cash conversion cycle stood at 18.25 days, reflecting the number of days it takes for the company to convert its investments in inventory and accounts receivable into cash. Subsequently, the cycle decreased to 8.87 days by December 31, 2021, and further improved to 9.99 days by December 31, 2022. This trend continued, with the cycle narrowing to 8.35 days by December 31, 2023, and 7.89 days by December 31, 2024.
The decreasing trend in the cash conversion cycle indicates that NRG Energy Inc. has been able to efficiently manage its inventory, collect receivables quickly, and optimize its payment cycles. A shorter cash conversion cycle means the company has enhanced its cash flow and liquidity position, allowing for more efficient use of its resources.
Overall, the declining trend in NRG Energy Inc.'s cash conversion cycle signals effective working capital management and operational efficiency, which can contribute to the company's financial health and sustainable growth.
Peer comparison
Dec 31, 2024