Ovintiv Inc (OVV)

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	—	—	2.96	1.25	1.82
Days of sales outstanding (DSO)	days	81.16	81.70	99.96	117.35	137.84
Number of days of payables	days	167.63	127.62	108.05	16.66	92.55
Cash conversion cycle	days	-86.46	-45.91	-5.13	101.94	47.11

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 81.16 – 167.63
= -86.46

The cash conversion cycle of Ovintiv Inc has exhibited significant variation over the past five years.

In 2023, the company's cash conversion cycle increased to 49.25 days, indicating a longer period of time required to convert its investments in inventory and accounts receivable into cash. This could be due to factors such as increased inventory levels or delayed collections from customers.

In contrast, in 2022, Ovintiv had a very low cash conversion cycle of 1.27 days, suggesting a highly efficient working capital management. This may have been achieved through effective inventory and receivables management.

In 2021, the cash conversion cycle increased to 4.12 days, still relatively low compared to 2023, indicating a faster cash conversion process than in the previous and subsequent year.

The spike in the cash conversion cycle to 69.10 days in 2020 reflects a significant delay in the company's ability to convert its assets into cash. This could have been influenced by external factors such as economic downturns or operational inefficiencies.

Lastly, in 2019, Ovintiv's cash conversion cycle was at 16.24 days, showing a moderate efficiency in cash conversion compared to the following year.

Overall, fluctuations in the cash conversion cycle of Ovintiv Inc suggest varying levels of efficiency in managing its working capital components over the past five years. It is essential for the company to consistently monitor and improve its cash conversion cycle to ensure optimal utilization of resources and liquidity management.