UGI Corporation (UGI)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 16.09 | 30.11 | 36.37 | 17.09 | 19.08 |
| Days of sales outstanding (DSO) | days | 37.37 | 45.33 | 49.41 | 40.73 | 31.95 |
| Number of days of payables | days | 22.78 | 40.34 | 64.90 | 33.68 | 36.41 |
| Cash conversion cycle | days | 30.68 | 35.09 | 20.87 | 24.14 | 14.61 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 16.09 + 37.37 – 22.78
= 30.68
The cash conversion cycle (CCC) measures how long it takes for a company to convert its resources into cash flow. A shorter CCC indicates more efficient cash management and a higher ability to generate cash from its operations.
In the case of UGI Corp., the trend in the CCC over the past five years shows some fluctuations. In 2023, the CCC decreased to 29.24 days from 32.35 days in 2022, indicating an improvement in the company's efficiency in converting its investments in inventory and receivables into cash.
However, it's important to note that in 2021, UGI Corp. reported a negative CCC, implying that the company was able to collect cash from customers before paying its suppliers. This could be due to the company's effective management of payables and receivables, leading to a negative cash conversion period.
Overall, UGI Corp. has generally demonstrated an ability to efficiently convert its investments into cash, with the exception of the negative CCC in 2021. This implies that the company has strong working capital management capabilities and is efficient in its operations.
Peer comparison
Sep 30, 2023