NRG Energy Inc. (NRG)

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	7.51	7.34	7.71	7.90	9.33	10.13	9.32	6.38	8.32	10.51	9.89	9.65	18.25	18.31	21.14	19.10	19.14	18.34	18.42	19.35
Days of sales outstanding (DSO)	days	44.85	45.99	39.26	40.95	55.29	48.23	48.89	44.83	43.89	51.44	56.69	73.10	36.29	44.38	39.21	34.52	38.09	52.22	39.96	34.22
Number of days of payables	days	28.75	25.62	23.70	25.51	45.25	37.66	45.24	39.93	37.99	46.48	58.69	67.70	36.22	41.78	40.11	36.35	36.09	43.63	36.00	34.50
Cash conversion cycle	days	23.61	27.71	23.28	23.34	19.37	20.69	12.97	11.28	14.21	15.47	7.89	15.05	18.32	20.91	20.25	17.27	21.15	26.93	22.38	19.07

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 7.51 + 44.85 – 28.75
= 23.61

The cash conversion cycle of NRG Energy Inc. has shown some fluctuations over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 21.44 days, which decreased from the previous quarter's 26.16 days. This indicates that NRG Energy Inc. was able to convert its investments in inventory and accounts receivable into cash more efficiently in Q4 2023.

Comparing Q4 2023 to the same period in the previous year (Q4 2022), there has been an increase in the cash conversion cycle from 16.79 days to 21.44 days. This suggests that NRG Energy Inc. took longer to convert its investments into cash in Q4 2023 compared to Q4 2022.

Furthermore, looking at the trend over the past eight quarters, the cash conversion cycle has generally been on an upward trajectory, with occasional fluctuations. The lowest point was observed in Q2 2022 at 9.49 days, indicating a high level of efficiency in converting investments into cash during that quarter.

Overall, NRG Energy Inc. should focus on optimizing its cash conversion cycle to ensure efficient management of working capital and maximize cash flow. Monitoring and analyzing this metric regularly can help the company identify areas for improvement in its operating cycle and enhance its overall financial performance.