Occidental Petroleum Corporation (OXY)

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	149.40	160.45	161.00	179.01	84.37
Days of sales outstanding (DSO)	days	41.27	42.84	59.17	43.35	111.24
Number of days of payables	days	269.39	313.96	340.06	281.72	262.01
Cash conversion cycle	days	-78.72	-110.67	-119.88	-59.36	-66.40

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 149.40 + 41.27 – 269.39
= -78.72

The cash conversion cycle of Occidental Petroleum Corp. has shown a downward trend over the past five years, indicating an improvement in managing its working capital effectively. The company has effectively reduced the time it takes to convert its investments in raw materials and inventory back into cash from sales.

In 2023, the company's cash conversion cycle was -148.96 days, an improvement from -177.04 days in 2022, -211.15 days in 2021, -121.72 days in 2020, and a significant improvement from -614.36 days in 2019. The negative values indicate that the company typically receives cash from its sales before having to pay its suppliers, a favorable position.

This trend suggests that Occidental Petroleum Corp. has been more efficient in managing its operating cycle, which includes converting inventory into sales and cash. The company's ability to manage its cash conversion cycle effectively is essential for maintaining liquidity, managing working capital, and enhancing profitability.