Southern Company (SO)

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	647.34	458.73	487.29	528.59	461.42
Days of sales outstanding (DSO)	days	35.86	25.77	27.29	29.29	26.67
Number of days of payables	days	559.67	604.05	448.80	491.20	408.67
Cash conversion cycle	days	123.54	-119.55	65.77	66.68	79.42

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 647.34 + 35.86 – 559.67
= 123.54

The cash conversion cycle of Southern Company has shown fluctuating trends over the past five years. In 2023, the company's cash conversion cycle increased significantly to 69.46 days compared to the previous year's 20.16 days. This indicates that Southern Company took longer to convert its resources into cash during 2023.

In 2021, the cash conversion cycle was 56.52 days, showing an improvement from the 72.43 days in 2020, but still higher than the 74.19 days in 2019. These fluctuations suggest that the company's efficiency in managing its cash flow and working capital has been variable over the years.

Overall, the increasing cash conversion cycle in 2023 raises concerns about Southern Company's ability to efficiently manage its working capital and cash flow. Further analysis would be required to understand the underlying reasons for this change and to identify areas for improvement in the company's cash conversion cycle.