Ovintiv Inc (OVV)

Days of sales outstanding (DSO)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Receivables turnover		4.50	4.47	3.65	3.11	2.65
DSO	days	81.16	81.70	99.96	117.35	137.84

December 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 4.50
= 81.16

Days Sales Outstanding (DSO) is a measure of how efficiently a company is able to collect cash from its sales. It indicates the average number of days it takes for a company to collect payment after making a sale. A lower DSO value is generally preferable as it signifies quicker cash conversion from sales.

Analyzing the DSO trend of Ovintiv Inc over the past five years, we observe fluctuations in the efficiency of their accounts receivable management. In 2023, the DSO stood at 49.25 days, indicating a moderate increase from the previous year's exceptionally low value of 1.27 days. This increase suggests that Ovintiv took slightly longer to collect payments from customers in 2023 compared to 2022.

In 2021, Ovintiv reported a DSO of 4.12 days, significantly lower than the previous year's DSO of 69.10 days in 2020. This sharp decrease reflects a substantial improvement in the company's accounts receivable collection efficiency.

Moreover, in 2019, the DSO was 16.24 days, indicating a reasonable collection period for that year. However, it increased significantly in 2020 before dropping dramatically in 2021.

The fluctuations in Ovintiv's DSO over the years suggest varying effectiveness in managing accounts receivable and collecting payments from customers. It is essential for the company to maintain a balance between extending credit to customers and ensuring timely collection to optimize cash flow and overall financial performance.