Targa Resources Inc (TRGP)
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 | 11.83 | 8.23 | 3.83 | 8.32 | 9.63 |
| Days of sales outstanding (DSO) | days | 33.43 | 24.56 | 28.68 | 38.12 | 35.99 |
| Number of days of payables | days | 50.15 | 30.29 | 35.05 | 38.22 | 56.96 |
| Cash conversion cycle | days | -4.89 | 2.51 | -2.53 | 8.23 | -11.33 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 11.83 + 33.43 – 50.15
= -4.89
The cash conversion cycle of Targa Resources Corp has shown variability over the past five years. In 2023, the company's cash conversion cycle stood at -7.71 days, indicating that Targa Resources Corp was able to convert its inventory into cash and then collect receivables efficiently within a relatively short period. This could suggest strong working capital management and efficient operations.
However, the cash conversion cycle was positive in 2022 at 1.75 days, meaning that the company took slightly longer to convert its inventory into cash and collect receivables. Nonetheless, the cycle remained relatively short, reflecting effective management of the company's cash flow.
In 2021, the cash conversion cycle was -4.52 days, indicating that Targa Resources Corp was once again able to efficiently convert its inventory into cash and collect receivables. The negative value suggests that the company had quick cash conversion and collection processes during that period.
Conversely, in 2020 and 2019, the cash conversion cycle was significantly negative at -8.51 days and particularly positive at 45.62 days, respectively. A negative cash conversion cycle implies that the company was able to generate cash from its operations before paying suppliers, showcasing strong operational efficiency. On the other hand, a highly positive cash conversion cycle in 2019 signals that Targa Resources Corp took more time to convert inventory and receivables into cash, possibly due to challenges in working capital management or operational inefficiencies during that period.
Overall, Targa Resources Corp's cash conversion cycle has displayed fluctuations, but generally, negative values or low positive values in recent years indicate efficient management of working capital and operational processes, supporting the company's financial health.
Peer comparison
Dec 31, 2023