UNITIL Corporation (UTL)

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	13.17	10.56	10.08	3,878.12	4,119.29
Days of sales outstanding (DSO)	days	28.54	30.51	29.50	30.12	25.91
Number of days of payables	days	46.54	63.52	61.40	15,147.50	19,605.71
Cash conversion cycle	days	-4.83	-22.45	-21.83	-11,239.26	-15,460.52

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 13.17 + 28.54 – 46.54
= -4.83

The cash conversion cycle of Unitil Corp. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle increased significantly to 14.70 days compared to 0.48 days in 2022. This indicates that it took Unitil Corp. longer to convert its investments in inventory and other resources into cash during the most recent year.

The sharp increase in the cash conversion cycle in 2023 may be a concern for the company's liquidity and operational efficiency. It suggests that Unitil Corp. may be struggling to manage its working capital effectively, potentially facing challenges in inventory turnover, accounts receivable collection, or managing accounts payable.

Comparing the 2023 figure to previous years, the company had a relatively lower cash conversion cycle in 2022, indicating a more efficient cash conversion process during that period. However, in 2021 and 2019, the cash conversion cycle was higher, implying longer cash conversion times during those years as well.

In 2020, there was a significant increase in the cash conversion cycle to 26.88 days, which could have been influenced by various factors such as changes in sales patterns, payment terms with suppliers, or inventory management issues.

Overall, Unitil Corp. should closely monitor its cash conversion cycle to identify the underlying reasons for the fluctuations and take necessary steps to improve working capital management and enhance operational efficiency.