Vital Energy Inc. (VTLE)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	4.66	8.38	5.10	11.30	0.96
Days of sales outstanding (DSO)	days	81.51	73.23	48.61	72.63	42.03
Number of days of payables	days	—	—	—	—	—
Cash conversion cycle	days	86.17	81.60	53.71	83.93	42.99

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 4.66 + 81.51 – —
= 86.17

The cash conversion cycle of Vital Energy Inc. has shown fluctuations over the past five years. In 2020, the company had a cash conversion cycle of 42.99 days, indicating that it took approximately this number of days for the company to convert its investments in inventory into cash receipts from customers.

The cycle increased significantly in 2021 to 83.93 days, suggesting a prolonged time to convert inventory investments into cash. This may indicate challenges in managing working capital efficiently or delays in receiving payments from customers.

In 2022, the cash conversion cycle decreased to 53.71 days, showing improvement from the previous year but still higher than the 2020 level. This reduction may suggest that the company implemented measures to streamline its working capital processes.

However, in 2023, the cycle increased again to 81.60 days, indicating a longer period to convert investments in inventory into cash receipts. This could be a concern if the company is facing difficulties in managing its working capital effectively.

By the end of 2024, the cash conversion cycle further increased to 86.17 days, which may raise concerns about Vital Energy Inc.'s ability to efficiently manage its cash flows and working capital.

Overall, the fluctuation in the cash conversion cycle of Vital Energy Inc. over the years highlights the importance of monitoring working capital management practices to ensure efficient utilization of resources and timely conversion of inventory into cash.