Sempra Energy (SRE)
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 | 56.33 | 51.50 | 53.74 | 46.94 | 44.86 |
| Days of sales outstanding (DSO) | days | 49.69 | 70.83 | 61.69 | 54.93 | 47.36 |
| Number of days of payables | days | 284.59 | 289.98 | 255.44 | 230.58 | 228.81 |
| Cash conversion cycle | days | -178.57 | -167.65 | -140.01 | -128.72 | -136.60 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 56.33 + 49.69 – 284.59
= -178.57
The cash conversion cycle of Sempra has exhibited variability over the past five years. In the most recent year, as of December 31, 2023, the company's cash conversion cycle improved significantly to -91.63 days, indicating that it took less time for Sempra to convert its investments in inventory and accounts receivable into cash during the operating cycle. This improvement suggests more efficient management of working capital and stronger liquidity position.
Comparing this to previous years, Sempra also showed favorable cash conversion cycles in 2022 and 2019, with -63.81 days and -92.54 days, respectively. These periods indicate efficient cash management practices as well. However, the company experienced a less favorable position in 2020 and 2021, with cash conversion cycles of -116.32 days and -92.61 days, respectively.
Overall, Sempra's recent improvement in the cash conversion cycle reflects enhanced operational efficiency and effective working capital management. It is important for the company to sustain this positive trend to ensure continued liquidity and financial health.
Peer comparison
Dec 31, 2023