Williams Companies Inc (WMB)
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 | 121.81 | 126.28 | 132.43 | 219.23 | 23.73 |
| Days of sales outstanding (DSO) | days | 64.74 | 55.38 | 90.64 | 67.94 | 47.24 |
| Number of days of payables | days | 704.24 | 635.52 | 962.99 | 1,009.97 | 84.10 |
| Cash conversion cycle | days | -517.69 | -453.86 | -739.92 | -722.80 | -13.13 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 121.81 + 64.74 – 704.24
= -517.69
Williams Companies Inc has shown a significant improvement in its cash conversion cycle over the past five years. The company's cash conversion cycle has been consistently negative, indicating that it is able to generate cash from its operating activities quicker than paying off its current liabilities.
However, it is important to note that a negative cash conversion cycle may not always be favorable as it could signal aggressive working capital management practices. In Williams Companies Inc's case, the substantial negative cash conversion cycle numbers in recent years could suggest efficient management of accounts receivable, inventory, and accounts payable.
Overall, a negative cash conversion cycle signifies that Williams Companies Inc is efficiently managing its cash flow and working capital, allowing the company to operate smoothly and potentially reinvest excess cash into growth opportunities or debt reduction.
Peer comparison
Dec 31, 2024