Vital Energy Inc. (VTLE)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Days of inventory on hand (DOH)	days	4.66	—	—	—	8.38	3.09	9.91	32.56	5.09	35.39	7.62	7.18	11.38	2.93	—	—	1.11	21.98	36.70	94.51
Days of sales outstanding (DSO)	days	83.58	40.83	51.81	74.20	73.23	60.93	35.66	32.62	48.62	36.27	55.33	82.20	70.60	79.64	80.59	52.65	32.19	24.63	23.59	22.12
Number of days of payables	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Cash conversion cycle	days	88.24	40.83	51.81	74.20	81.60	64.02	45.57	65.18	53.71	71.66	62.95	89.37	81.97	82.57	80.59	52.65	33.30	46.61	60.30	116.62

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 4.66 + 83.58 – —
= 88.24

Vital Energy Inc.'s cash conversion cycle has shown fluctuations over the past few years. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

The trend indicates that the company's cash conversion cycle peaked at 116.62 days on March 31, 2020, and has since experienced fluctuations, reaching a low of 33.30 days on December 31, 2020. This improvement suggests that the company may have become more efficient in managing its inventory, collecting receivables, and paying its payables.

However, from March 31, 2021, the cash conversion cycle started to trend upward again, reaching 88.24 days on December 31, 2024. A longer cash conversion cycle can indicate inefficiencies in managing working capital, potentially leading to liquidity issues and affecting overall financial performance.

It is important for Vital Energy Inc. to monitor and manage its cash conversion cycle effectively to optimize its working capital management and ensure healthy cash flow operations. This can involve strategies such as improving inventory management, streamlining accounts receivable and accounts payable processes, and maintaining good relationships with suppliers and customers.