Southwest Gas Holdings Inc (SWX)
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 | 9.67 | 258.15 | 44.15 | 0.35 | 8.36 |
| Days of sales outstanding (DSO) | days | 59.68 | 64.39 | 71.80 | 58.98 | 59.18 |
| Number of days of payables | days | 40.23 | 78.13 | 53.59 | 39.73 | 44.98 |
| Cash conversion cycle | days | 29.12 | 244.41 | 62.36 | 19.60 | 22.56 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 9.67 + 59.68 – 40.23
= 29.12
The cash conversion cycle of Southwest Gas Holdings Inc has shown fluctuations over the past five years, with negative values indicating efficient cash management.
In 2023, the cash conversion cycle improved significantly to -35.11 days, reflecting the company's ability to convert its investments in raw materials into cash quickly, ultimately reducing the time it takes to convert inputs into sales. This efficiency may be attributed to streamlined operations and effective inventory management.
The steep decline from -231.56 days in 2022 to -35.11 days in 2023 suggests a remarkable enhancement in the company's working capital management. This improvement indicates that Southwest Gas Holdings Inc has been able to collect receivables faster, manage inventory effectively, and extend payment terms to suppliers, resulting in a shorter cash conversion cycle.
Overall, the trend of decreasing cash conversion cycle values over the past five years demonstrates Southwest Gas Holdings Inc's proficiency in managing its working capital efficiently. This efficient management reflects positively on the company's liquidity and operational effectiveness.
Peer comparison
Dec 31, 2023