Valero Energy Corporation (VLO)

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	20.99	15.44	20.63	33.57	24.72
Days of sales outstanding (DSO)	days	31.70	24.74	33.45	34.35	30.29
Number of days of payables	days	34.79	29.11	41.14	33.81	35.97
Cash conversion cycle	days	17.90	11.07	12.93	34.11	19.03

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 20.99 + 31.70 – 34.79
= 17.90

The cash conversion cycle of Valero Energy Corp has varied over the past five years. In 2023, the company's cash conversion cycle was 16.80 days, representing an increase from the previous year's 10.20 days. This indicates that the company took longer to convert its investments in inventory into cash during the year.

Compared to 2021, where the cash conversion cycle was 11.10 days, the 2023 figure reflects a slight deterioration in the company's efficiency in managing its working capital.

However, it is worth noting that the cash conversion cycle in 2023 was more favorable compared to 2020 when it stood at 34.08 days. This suggests that Valero Energy Corp improved its efficiency in managing its working capital during the year, leading to a quicker conversion of inventory into cash.

In comparison to 2019 when the cash conversion cycle was 17.93 days, the 2023 performance showed a slight increase, indicating a less efficient working capital management in terms of converting inventory into cash.

Overall, the trend in Valero Energy Corp's cash conversion cycle reveals fluctuations over the past five years, with 2023 showing a moderate increase compared to the previous year but still better than the performance in 2020.