Weatherford International PLC (WFRD)

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	621.21	803.47	764.22	137.31	92.08
Days of sales outstanding (DSO)	days	88.36	83.35	82.61	81.82	91.43
Number of days of payables	days	535.28	536.42	433.44	62.24	55.42
Cash conversion cycle	days	174.29	350.39	413.39	156.88	128.10

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 621.21 + 88.36 – 535.28
= 174.29

The cash conversion cycle of Weatherford International plc has shown an improving trend over the past three years. In 2021, the company's cash conversion cycle was 121.59 days, indicating that it took the company longer to convert its investment in inventory into cash. However, by the end of 2023, the cash conversion cycle had decreased to 98.15 days, reflecting a more efficient management of working capital.

A declining cash conversion cycle is generally a positive indicator as it suggests that the company is improving its cash flow efficiency and is able to convert its investments in inventory and receivables into cash more quickly. This can have a positive impact on the company's liquidity and overall financial health.

Overall, the decreasing trend in Weatherford International plc's cash conversion cycle over the three-year period signifies improvements in the company's working capital management and operational efficiency. It is important for investors and stakeholders to monitor this metric as it provides insights into how effectively the company is managing its cash flow and working capital.