SJW Corporation (SJW)

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	—	7.92	9.52	10.82	5.06
Days of sales outstanding (DSO)	days	65.94	64.95	65.19	62.10	68.78
Number of days of payables	days	34.12	24.03	26.60	30.59	35.29
Cash conversion cycle	days	31.81	48.85	48.11	42.33	38.56

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 65.94 – 34.12
= 31.81

The cash conversion cycle for SJW Group has been fluctuating over the past five years. In 2023, the company experienced a negative cash conversion cycle of -1.78 days, indicating that it was able to convert its investments in inventory and accounts receivable into cash at a faster rate than paying its liabilities. This may suggest efficient management of working capital.

Conversely, in 2022 and 2021, the company had positive cash conversion cycles of 15.30 days and 13.75 days, respectively, implying slower conversion of investments into cash relative to paying liabilities. This could indicate potential inefficiencies in managing inventory, accounts receivable, and accounts payable during those years.

In 2020, SJW Group improved its cash conversion cycle to 4.06 days, indicating a more efficient conversion of investments into cash compared to the previous two years. Additionally, in 2019, the company had a negative cycle of -6.12 days, implying a rapid conversion of investments into cash, potentially due to effective working capital management strategies.

Overall, the fluctuation in SJW Group's cash conversion cycle suggests varying efficiency levels in managing working capital over the past five years. It is essential for the company to analyze the factors contributing to these fluctuations and implement strategies to maintain a consistently low or negative cash conversion cycle to optimize its cash flow and liquidity position.