Sempra Energy (SRE)
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 | 60.67 | 56.33 | 51.50 | 53.74 | 46.94 |
| Days of sales outstanding (DSO) | days | 57.75 | 49.69 | 70.83 | 61.69 | 54.93 |
| Number of days of payables | days | 265.47 | 284.59 | 289.98 | 255.44 | 230.58 |
| Cash conversion cycle | days | -147.06 | -178.57 | -167.65 | -140.01 | -128.72 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 60.67 + 57.75 – 265.47
= -147.06
The cash conversion cycle of Sempra Energy has shown a consistent trend of improvement over the years, reflecting the company's efficiency in managing its operating cycle. The cycle decreased from -128.72 days as of December 31, 2020, to -140.01 days as of December 31, 2021, indicating a reduction in the time it takes the company to convert its investments in inventory and other resources into cash.
Subsequently, there was a further improvement in the cash conversion cycle to -167.65 days as of December 31, 2022, and -178.57 days as of December 31, 2023, demonstrating the company's ability to optimize its working capital and generate cash flows efficiently.
However, there was a slight increase in the cash conversion cycle to -147.06 days as of December 31, 2024, which may indicate potential challenges in managing working capital effectively during that period.
Overall, the negative values of the cash conversion cycle suggest that Sempra Energy is operating on a cash-efficient basis, where the company is collecting cash from its sales and converting investments into revenue more rapidly than paying off its liabilities, showcasing strong liquidity and operational efficiency.
Peer comparison
Dec 31, 2024