Phillips 66 (PSX)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 11.02 | 10.05 | 7.89 | 11.95 | 24.04 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 11.02 | 10.05 | 7.89 | 11.95 | 24.04 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 11.02 + — – —
= 11.02
The cash conversion cycle of Phillips 66 has shown a decreasing trend over the five-year period from December 31, 2020, to December 31, 2024, indicating an improvement in the efficiency of the company's working capital management.
On December 31, 2020, the cash conversion cycle was 24.04 days, showing the average number of days it takes for Phillips 66 to convert its investments in inventory into cash received from sales. Over the next year, the cycle decreased significantly to 11.95 days by December 31, 2021, reflecting a faster conversion of inventory into cash.
By December 31, 2022, the cash conversion cycle decreased further to 7.89 days, demonstrating the company's enhanced ability to manage its working capital effectively. However, there was a slight increase in the cycle to 10.05 days by December 31, 2023, possibly indicating a temporary disruption in the company's cash conversion process.
As of December 31, 2024, the cash conversion cycle increased slightly to 11.02 days, still remaining lower compared to the initial period, suggesting that Phillips 66 has been able to maintain a relatively efficient working capital management strategy.
Overall, the decreasing trend in the cash conversion cycle indicates that Phillips 66 has been successful in optimizing its working capital efficiency and converting its investments into cash at a faster pace over the five-year period.
Peer comparison
Dec 31, 2024