Williams Companies Inc (WMB)

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	122.40	124.69	128.05	111.41	127.08	116.28	103.20	97.87	134.25	208.37	191.26	110.82	219.23	134.05	73.45	53.80	23.73	24.44	20.63	15.31
Days of sales outstanding (DSO)	days	64.74	45.35	48.83	46.67	55.38	46.86	43.17	48.28	90.64	85.95	94.56	68.33	67.94	76.61	40.88	45.87	47.24	47.71	42.44	42.12
Number of days of payables	days	707.63	515.53	557.08	485.73	639.56	593.62	456.65	504.58	976.27	1,218.07	1,286.78	873.35	1,009.97	609.79	231.34	200.99	84.10	72.22	118.38	52.35
Cash conversion cycle	days	-520.49	-345.50	-380.20	-327.65	-457.10	-430.48	-310.27	-358.44	-751.37	-923.74	-1,000.95	-694.20	-722.80	-399.13	-117.01	-101.32	-13.13	-0.07	-55.31	5.08

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 122.40 + 64.74 – 707.63
= -520.49

The cash conversion cycle of Williams Companies Inc has displayed significant fluctuations over the analyzed periods. The negative values indicate that the company's operating cycle, from the purchase of raw materials to the collection of cash from customers, is completed in a shorter time than the payment cycle for creditors.

The company experienced a notable improvement in its cash conversion cycle from positive values to negative values, indicating a more efficient management of working capital. This efficiency may be attributed to the company's ability to optimize inventory levels, negotiate favorable payment terms with suppliers, and accelerate the collection of receivables from customers.

However, it is essential to note that extremely low or negative cash conversion cycles could also signify aggressive accounting practices, such as overly optimistic revenue recognition or delayed payment to suppliers, which may pose risks in the long term. It is crucial for investors and analysts to assess the sustainability and underlying reasons for such drastic fluctuations in the cash conversion cycle to make informed decisions regarding the company's financial health and operational efficiency.