Southern Company (SO)

Cash conversion cycle

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	647.00	939.51	875.70	806.87	799.59	626.88	547.38	447.06	378.00	514.14	464.63	510.95	644.06	435.75	409.74	401.83	552.71	487.79	465.32	399.97
Days of sales outstanding (DSO)	days	35.86	37.61	23.34	22.69	25.77	27.94	30.81	29.34	27.29	28.58	26.65	27.32	29.29	30.38	27.07	26.91	26.67	29.49	26.60	27.03
Number of days of payables	days	559.37	878.03	736.80	693.91	1,052.88	719.95	697.84	478.52	348.15	507.54	454.33	479.06	598.50	338.60	307.52	299.87	489.52	398.37	429.49	389.27
Cash conversion cycle	days	123.49	99.09	162.24	135.66	-227.52	-65.13	-119.65	-2.13	57.14	35.19	36.94	59.21	74.85	127.53	129.29	128.86	89.86	118.91	62.43	37.73

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 647.00 + 35.86 – 559.37
= 123.49

The cash conversion cycle for Southern Company has shown variations over the past eight quarters. In Q4 2023, the cash conversion cycle increased to 69.46 days from 53.74 days in Q3 2023, indicating a longer period for the company to convert its investments in inventory back to cash. This increase was a significant deviation from the trend observed in the previous quarters, where the cycle ranged between 20.16 days and 56.23 days.

Comparing Q4 2023 to the same quarter in the previous year, there has been a substantial increase in the cash conversion cycle, which was only 20.16 days in Q4 2022. This suggests a slowdown in the company's ability to efficiently manage its working capital in the most recent quarter.

Overall, the trend in the cash conversion cycle for Southern Company has been slightly volatile, with some quarters demonstrating more efficient working capital management than others. It is essential for the company to closely monitor and potentially improve its cash conversion cycle to ensure optimal utilization of resources and maintain liquidity levels in the future.