Southern Company (SO)
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 | 199.14 | 90.33 | 52.94 | 65.86 | 86.67 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 199.14 | 90.33 | 52.94 | 65.86 | 86.67 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 199.14 + — – —
= 199.14
The cash conversion cycle for Southern Company has shown some fluctuations over the past five years. In December 2020, the cash conversion cycle was 86.67 days, which decreased to 65.86 days by December 2021, indicating an improvement in the company's efficiency in managing its cash flow.
By December 2022, the cash conversion cycle further decreased to 52.94 days, reflecting an even more efficient cash management system. However, the trend reversed in December 2023, with the cash conversion cycle increasing to 90.33 days, suggesting potential challenges in converting investment in inventory and receivables into cash.
The most significant change occurred by December 2024 when the cash conversion cycle spiked to 199.14 days, indicating an extended period for the company to convert its resources into cash. This sharp increase may raise concerns about liquidity management and operational efficiency within Southern Company during that period.
Overall, the fluctuations in the cash conversion cycle highlight the importance of closely monitoring working capital management to ensure optimal cash flow efficiency and liquidity for sustainable operations.
Peer comparison
Dec 31, 2024