PNM Resources Inc (PNM)
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 | 27.88 | 16.14 | 21.00 | 26.46 | 60.44 |
| Days of sales outstanding (DSO) | days | 37.09 | 40.48 | 38.12 | 41.84 | 37.12 |
| Number of days of payables | days | 58.35 | 52.17 | 55.70 | 67.45 | 79.97 |
| Cash conversion cycle | days | 6.62 | 4.45 | 3.42 | 0.85 | 17.59 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 27.88 + 37.09 – 58.35
= 6.62
The cash conversion cycle of PNM Resources Inc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 7.74 days from a negative value in the previous year, indicating that it took PNM Resources Inc 7.74 days to convert its investments in inventory and accounts receivable into cash. This increase suggests a potential slowdown in the company's cash conversion efficiency compared to the previous year.
Looking back to 2019, PNM Resources Inc had a significantly higher cash conversion cycle of 23.61 days, indicating a longer period for converting investments into cash. However, the company managed to improve its cash conversion cycle steadily in 2020, 2021, and 2022, achieving negative values, which are generally seen as favorable as they indicate that the company is able to convert investments into cash quickly.
Overall, the trend in PNM Resources Inc's cash conversion cycle fluctuated over the years, with improvements in efficiency observed in 2020, 2021, and 2022 but a slight deterioration in 2023. Continued monitoring of the cash conversion cycle will be essential to assess the company's management of working capital and liquidity.
Peer comparison
Dec 31, 2023