Williams Companies Inc (WMB)
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 | 126.28 | 132.43 | 219.23 | 23.73 | 32.47 |
| Days of sales outstanding (DSO) | days | 55.38 | 90.64 | 67.94 | 47.24 | 44.33 |
| Number of days of payables | days | 635.52 | 962.99 | 1,009.97 | 84.10 | 143.40 |
| Cash conversion cycle | days | -453.86 | -739.92 | -722.80 | -13.13 | -66.60 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 126.28 + 55.38 – 635.52
= -453.86
The cash conversion cycle of Williams Cos Inc has shown volatility over the past five years. In 2019 and 2020, the company had negative cash conversion cycles, indicating that it was able to efficiently convert its inventory into cash and collect receivables quickly. However, in 2021, there was a significant increase in the days required to convert inventory and receivables into cash, resulting in a negative cash conversion cycle of -58.99 days.
This negative trend continued into 2022, with an even higher cash conversion cycle of -126.80 days. The company managed to improve its cash conversion cycle in 2023, albeit still negative at -158.69 days. This suggests that Williams Cos Inc has been able to streamline its operations and manage its working capital more effectively in the most recent year.
Overall, the negative cash conversion cycle indicates that Williams Cos Inc has been efficient in managing its working capital, converting inventory and receivables into cash quickly, which can be a positive sign for its liquidity and operational efficiency. However, the fluctuation in the cash conversion cycle over the years highlights the importance of monitoring and actively managing working capital to ensure continued efficiency.
Peer comparison
Dec 31, 2023