ONEOK Inc (OKE)
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 | 19.55 | 8.80 | 12.74 | 16.27 | 16.40 |
| Days of sales outstanding (DSO) | days | 37.02 | 24.98 | 31.82 | 35.46 | 29.99 |
| Number of days of payables | days | 47.85 | 27.70 | 39.68 | 51.38 | 65.06 |
| Cash conversion cycle | days | 8.72 | 6.09 | 4.88 | 0.35 | -18.67 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 19.55 + 37.02 – 47.85
= 8.72
The cash conversion cycle, a key metric for assessing efficiency in managing working capital, reflects how long it takes a company to convert its investments in inventory and other resources into cash inflows from sales.
From the data provided, we observe that Oneok Inc.'s cash conversion cycle has shown significant variation over the past five years. In 2023, the company's cash conversion cycle stands at 11.43 days, indicating that it takes approximately 11.43 days for Oneok Inc. to convert its investments in inventory and other resources into cash inflows from sales.
Comparing this to previous years, we see a notable increase from the extremely low figure of 0.31 days in 2022, which suggests a significant slowdown in the efficiency of the company's working capital management. In 2021, Oneok Inc. reported a negative cash conversion cycle of -3.30 days, which could imply that the company was able to generate cash from sales even before paying for the resources used in production, leading to a more efficient working capital cycle.
The positive value in 2020 at 10.58 days indicates a return to a more typical cash conversion cycle, but the negative value of -7.82 days in 2019 suggests an exceptional level of efficiency in working capital management that year.
Overall, the fluctuation in Oneok Inc.'s cash conversion cycle over the years highlights the importance of monitoring working capital closely and making adjustments to optimize efficiency in managing cash flow and investments in inventory and resources.
Peer comparison
Dec 31, 2023