ProPetro Holding Corp (PUMP)

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	4.52	1.56	1.64	1.15	3.46
Days of sales outstanding (DSO)	days	53.23	61.66	53.34	39.08	37.87
Number of days of payables	days	41.23	72.47	63.36	33.45	274.26
Cash conversion cycle	days	16.53	-9.24	-8.38	6.78	-232.93

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 4.52 + 53.23 – 41.23
= 16.53

The cash conversion cycle of ProPetro Holding Corp has shown significant fluctuations over the past five years. In 2023, the company's cash conversion cycle was 16.53 days, indicating that it took approximately 16.53 days to convert raw materials into cash through sales. This was a notable increase from the previous year when the company had a negative cash conversion cycle of -9.24 days, which suggests that the company was able to collect cash from customers before paying suppliers, resulting in a favorable position.

In 2022 and 2021, ProPetro Holding Corp also maintained negative cash conversion cycles of -8.38 days and -232.93 days, respectively. These negative values indicate that the company was efficient in managing its working capital, with the ability to convert inventory into cash quickly and collect receivables promptly.

However, in 2020, the company experienced a positive cash conversion cycle of 6.78 days, suggesting a slight delay in converting inventory and receivables into cash compared to the previous years.

Overall, the trend in ProPetro Holding Corp's cash conversion cycle shows variations in efficiency in managing its working capital over the years, with fluctuations from negative to positive cycles. This metric is essential for assessing the company's ability to manage its operating cycle effectively and convert invested capital into cash.