Northwest Natural Gas Co (NWN)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	262.47	227.86	165.55	144.83	128.84
Days of sales outstanding (DSO)	days	61.27	89.60	77.06	70.18	60.11
Number of days of payables	days	276.12	372.22	288.26	233.77	241.48
Cash conversion cycle	days	47.62	-54.76	-45.65	-18.77	-52.54

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 262.47 + 61.27 – 276.12
= 47.62

The cash conversion cycle of Northwest Natural Holding Co has shown variability over the past five years. In 2023, the company's cash conversion cycle increased to 37.33 days, indicating that it takes longer for the company to convert its investments in inventory and other resources into cash from sales. This could be a potential concern as it may tie up the company's cash flow for a longer period.

Comparing this to 2022, where the company had a shorter cash conversion cycle of 10.11 days, there has been a significant deterioration in efficiency in converting resources into cash in a year-over-year comparison.

In 2021, the company had a negative cash conversion cycle of -18.12 days. This suggests that the company was able to receive cash from sales before having to pay its suppliers, signaling efficient management of working capital and strong liquidity position.

The positive cash conversion cycle in 2020 of 9.27 days shows that the company needed to invest in resources before receiving cash from sales. While this is a common scenario for many businesses, a balance needs to be maintained to ensure optimal cash flow management.

Similarly, in 2019, a negative cash conversion cycle of -17.37 days indicated that the company was able to fund its operations through cash generated from sales before having to pay suppliers, a favorable position in terms of working capital management.

Overall, fluctuations in the cash conversion cycle of Northwest Natural Holding Co over the years suggest varying efficiency in managing working capital and converting resources into cash. Further analysis would be required to understand the underlying factors driving these changes and to assess the company's overall financial health and operational efficiency.