Northwest Natural Gas Co (NWN)

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
Days of inventory on hand (DOH) days 262.47 181.43 130.98 82.53 227.86 208.09 140.13 71.22 165.55 132.39 88.15 60.58 144.83 99.88 97.71 78.59 128.84 60.15
Days of sales outstanding (DSO) days 61.27 22.29 28.33 68.89 89.60 25.02 33.09 58.10 77.06 23.54 34.35 67.89 70.18 25.57 23.60 58.02 60.11 23.82
Number of days of payables days 276.12 190.52 196.70 221.62 372.22 249.29 287.47 278.59 288.26 209.40 221.05 204.57 233.77 185.69 177.41 198.29 241.48 111.16
Cash conversion cycle days 47.62 13.19 -37.38 -70.20 -54.76 -16.19 -114.25 -149.27 -45.65 -53.47 -98.54 -76.09 -18.77 -60.25 -56.09 -61.67 -52.54 -27.19

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 significant fluctuations over the past eight quarters. During Q4 2023, the company's cash conversion cycle increased to 37.33 days, indicating that it took longer for the company to convert its investments in inventory into cash. This could be a result of slower sales or delays in collecting receivables.

In the previous quarter, Q3 2023, the cash conversion cycle had decreased to 19.00 days, showing improved efficiency in managing inventory, sales, and collections. However, this was a positive trend compared to the significant improvement seen in Q2 2023, where the cycle was only 4.21 days.

In Q1 2023, the cash conversion cycle increased to 16.90 days, which was higher compared to the cycle in Q4 2022 (10.11 days). The negative trend continued from Q2 2022, where the company had a negative cash conversion cycle of -36.44 days, indicating that the company was able to generate cash from its sales and collection activities more quickly than paying for its inventory purchases.

In Q1 2022, the company's cash conversion cycle was even more negative at -50.81 days, suggesting a very efficient cash conversion process. However, such a low cash conversion cycle may not always be sustainable in the long term as it could indicate aggressive sales and collection practices.

Overall, fluctuations in the cash conversion cycle of Northwest Natural Holding Co reflect variations in the company's efficiency in managing its working capital components. It is essential for the company to monitor and optimize its cash conversion cycle to ensure a healthy balance between maintaining adequate inventory levels, efficient sales processes, and timely collections to support its operations and growth.