Viper Energy Ut (VNOM)
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 | 0.83 | 26.26 | — | — | — |
| Days of sales outstanding (DSO) | days | 0.36 | 34.40 | 49.57 | 46.91 | 71.08 |
| Number of days of payables | days | — | 3.18 | 0.23 | 0.09 | — |
| Cash conversion cycle | days | 1.19 | 57.48 | 49.34 | 46.82 | 71.08 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 0.83 + 0.36 – —
= 1.19
The cash conversion cycle of Viper Energy Ut has fluctuated over the past five years, indicating variations in the efficiency of its working capital management. The company's cash conversion cycle was notably low at 1.19 days as of December 31, 2023, which suggests that the company is able to convert its investments in inventory and receivables into cash quickly.
In contrast, the cash conversion cycle was considerably longer in prior years, ranging from 46.82 days to 71.08 days, indicating that the company took more time to convert its inventory and receivables into cash during those periods. A longer cash conversion cycle can potentially tie up capital and lead to liquidity challenges.
Overall, the downward trend in the cash conversion cycle from 2020 to 2023 is a positive indicator of improved efficiency in working capital management for Viper Energy Ut. However, it will be important for the company to continue monitoring and managing its working capital effectively to sustain this improvement and optimize its cash flow in the future.
Peer comparison
Dec 31, 2023