Phillips 66 (PSX)

Cash conversion cycle

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	10.46	15.64	16.86	13.25	7.77	10.60	12.14	13.75	11.58	17.33	21.83	24.44	21.89	23.90	22.27	19.57	13.86	20.58	18.65	19.33
Days of sales outstanding (DSO)	days	28.97	28.89	21.82	19.61	22.85	29.72	32.09	29.41	25.06	29.81	38.27	44.86	44.73	27.84	19.73	15.53	28.36	23.62	21.87	23.47
Number of days of payables	days	—	—	—	24.14	25.48	28.27	33.16	36.57	26.03	32.31	37.05	42.80	29.07	23.94	21.26	17.92	29.52	28.85	26.74	30.06
Cash conversion cycle	days	39.42	44.53	38.69	8.71	5.14	12.06	11.07	6.59	10.61	14.83	23.05	26.49	37.55	27.80	20.74	17.18	12.70	15.35	13.79	12.74

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 10.46 + 28.97 – —
= 39.42

The cash conversion cycle of Phillips 66 has exhibited fluctuations over the past eight quarters. In Q1 2022, the company had a relatively short cash conversion cycle of 2.94 days, reflecting efficient management of its working capital. This efficiency decreased in Q2 2022, as the cash conversion cycle increased to 8.21 days, indicating a longer period for the company to convert its investments in inventory and accounts receivable into cash.

The cash conversion cycle further increased in Q3 2022 to 10.37 days before decreasing significantly in Q4 2022 to 4.00 days, suggesting improvements in the management of accounts receivable and inventory during that period. However, in Q1 2023, the cash conversion cycle slightly increased to 7.41 days, indicating a longer cycle than in the previous quarter.

The trend reversed in Q2 2023, with the cash conversion cycle increasing notably to 11.24 days, indicating potential challenges in managing working capital effectively. This trend continued into Q3 2023, where the cash conversion cycle was 9.57 days, reflecting continued inefficiencies in converting investments into cash.

Overall, the fluctuations in the cash conversion cycle of Phillips 66 over the past eight quarters suggest varying degrees of efficiency in managing working capital, with periods of improvement and challenges. Further analysis of the company's inventory management, accounts receivable collection, and accounts payable policies may provide insights into the factors contributing to these fluctuations in the cash conversion cycle.