Vital Energy Inc. (VTLE)
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 | 8.38 | 5.10 | 11.30 | 0.96 | 2.06 |
| Days of sales outstanding (DSO) | days | 73.23 | 48.61 | 72.63 | 42.03 | 48.16 |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 81.60 | 53.71 | 83.93 | 42.99 | 50.22 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 8.38 + 73.23 – —
= 81.60
The cash conversion cycle of Vital Energy Inc., a metric that reflects the time it takes for the company to convert its investments in inventory and other resources into cash inflows from sales, has shown fluctuations over the past five years. In 2023, the cash conversion cycle increased to 81.60 days compared to 53.71 days in 2022, indicating a longer period for Vital Energy to convert its investments into cash.
This increase in the cash conversion cycle could be attributed to various factors such as changes in inventory management, payment terms with suppliers, or the efficiency of the company's sales and collection processes. The longer cash conversion cycle may tie up more of the company's capital in its operating cycle, potentially impacting liquidity and working capital management.
In contrast, in 2020, the cash conversion cycle was at its lowest at 42.99 days, suggesting that Vital Energy was able to optimize its operations to quickly convert investments into cash during that period. Similarly, in 2019, the cash conversion cycle was 50.22 days, indicating a relatively efficient conversion of resources into cash.
Overall, analyzing the trend of the cash conversion cycle over the past five years provides insights into Vital Energy's operational efficiency, working capital management, and potential areas for improvement to enhance cash flow and overall financial performance.
Peer comparison
Dec 31, 2023