Targa Resources Inc (TRGP)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 9.39 | 11.47 | 8.86 | 6.42 | 11.05 | 15.76 | 8.15 | 3.37 | 8.00 | 9.00 | 4.02 | 2.23 | 3.83 | 9.81 | 2.53 | 2.48 | 11.09 | 16.04 | 13.30 | 5.58 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 9.39 | 11.47 | 8.86 | 6.42 | 11.05 | 15.76 | 8.15 | 3.37 | 8.00 | 9.00 | 4.02 | 2.23 | 3.83 | 9.81 | 2.53 | 2.48 | 11.09 | 16.04 | 13.30 | 5.58 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 9.39 + — – —
= 9.39
The cash conversion cycle is a crucial financial metric that measures how long it takes for a company to convert its investments in inventory and other resources into cash flow from sales. For Targa Resources Inc, the cash conversion cycle has exhibited fluctuations over the reporting periods provided.
The trend in Targa Resources Inc's cash conversion cycle shows that it has varied significantly in the past few years. From March 31, 2020, when it stood at 5.58 days, there was an upward trend reaching 16.04 days on September 30, 2020. Subsequently, there was a notable decrease in the cash conversion cycle to 2.48 days by March 31, 2021, indicating an improvement in the company's efficiency in managing its working capital.
However, the cycle increased thereafter, hitting 15.76 days as of September 30, 2023. Notably, there have been fluctuations in the cash conversion cycle since then, with values ranging between 3.37 days and 11.47 days.
Overall, a lower cash conversion cycle is favorable as it indicates that the company is able to efficiently manage its working capital, thereby generating cash quickly. Conversely, a longer cycle may indicate issues with liquidity management or inefficiencies in the supply chain. Targa Resources Inc should aim to maintain a reasonable cash conversion cycle to ensure optimal working capital management and financial health.
Peer comparison
Dec 31, 2024