Schlumberger NV (SLB)

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	1,286.76	2,214.74	2,156.03	1,863.15	1,663.33
Days of sales outstanding (DSO)	days	80.58	87.38	89.13	86.64	82.76
Number of days of payables	days	1,244.12	2,328.83	2,113.98	1,825.00	1,456.53
Cash conversion cycle	days	123.22	-26.71	131.18	124.80	289.56

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 1,286.76 + 80.58 – 1,244.12
= 123.22

The cash conversion cycle (CCC) of Schlumberger NV has shown varying trends over the past five years. In 2020, the company had a CCC of 289.56 days, indicating that it took an extensive period to convert its investments in raw materials and other resources into cash inflows. However, the CCC improved significantly in 2021, dropping to 124.80 days, suggesting a more efficient management of working capital.

In 2022, there was a slight increase in the CCC to 131.18 days, which could be attributed to changes in the company's operating cycle or payment terms. Interestingly, by the end of 2023, the CCC turned negative at -26.71 days. A negative CCC implies that Schlumberger NV was able to convert its investments into cash and receive payments from customers before paying its suppliers, indicating an optimal management of working capital.

By the end of 2024, the CCC rose slightly to 123.22 days, although it remained lower compared to the initial years in this period. Overall, the fluctuation in Schlumberger NV's cash conversion cycle reflects changes in the company's efficiency in managing its operating cycle, inventory turnover, accounts receivable, and accounts payable. It is crucial for the company to continue monitoring and optimizing its CCC to ensure effective cash flow management and operational efficiency.