ProPetro Holding Corp (PUMP)

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 7.37 4.92 1.82 1.81 1.35
Days of sales outstanding (DSO) days
Number of days of payables days
Cash conversion cycle days 7.37 4.92 1.82 1.81 1.35

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 7.37 + — – —
= 7.37

The cash conversion cycle of ProPetro Holding Corp has shown an increasing trend over the years based on the provided data. As of December 31, 2020, the company had a relatively low cash conversion cycle of 1.35 days, indicating its efficiency in converting inventory and accounts receivable into cash.

However, by December 31, 2024, the cash conversion cycle had extended to 7.37 days, suggesting a lengthening period in which the company takes to convert its investments in inventory into cash receipts from customers. This increase may imply potential issues with managing inventory or accounts receivable efficiently, leading to a slower cash conversion process.

Overall, monitoring the cash conversion cycle is crucial for assessing the company's liquidity and operational efficiency. ProPetro Holding Corp should analyze the factors contributing to the lengthening cycle and implement strategies to optimize working capital management for better cash flow performance.