Essential Utilities Inc (WTRG)
Cash conversion cycle
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 111.99 | 1,257.36 | 1,175.64 | 1,286.70 | 3,350.64 | 2,195.01 | 1,566.06 | 863.31 | 2,043.51 | 814.68 | 498.33 | 301.59 | 1,380.15 | 89.59 | 75.73 | 59.48 | 33.33 | 29.84 | 25.09 | 21.60 |
| Days of sales outstanding (DSO) | days | 43.67 | 33.44 | 35.77 | 52.22 | 60.11 | 34.88 | 39.75 | 52.56 | 50.71 | 34.50 | 39.08 | 51.60 | 68.20 | 57.02 | 70.30 | 101.89 | 44.15 | 49.11 | 47.45 | 41.65 |
| Number of days of payables | days | 219.86 | 1,893.51 | 1,938.18 | 2,089.19 | 4,006.70 | 2,079.24 | 2,363.58 | 2,360.80 | 3,598.56 | 1,172.78 | 1,036.37 | 1,053.09 | 4,194.46 | 212.76 | 187.67 | 202.75 | 135.85 | 100.88 | 88.48 | 73.43 |
| Cash conversion cycle | days | -64.20 | -602.71 | -726.78 | -750.27 | -595.94 | 150.65 | -757.77 | -1,444.93 | -1,504.34 | -323.60 | -498.96 | -699.90 | -2,746.11 | -66.15 | -41.64 | -41.38 | -58.37 | -21.93 | -15.94 | -10.18 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 111.99 + 43.67 – 219.86
= -64.20
Essential Utilities Inc's cash conversion cycle has shown significant improvement over the quarters, reflecting the company's effectiveness in managing its working capital. The cash conversion cycle measures the amount of time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
In Q4 2023, the company's cash conversion cycle was negative at -68.76 days, indicating that Essential Utilities Inc was able to convert its resources into cash much faster than in previous quarters. This improvement suggests efficient inventory management, quicker collection of receivables, or extended payment terms from suppliers.
Prior to Q4 2023, the company experienced negative cash conversion cycles in Q3 2023 and Q2 2023, which also reflect efficient working capital management. However, in Q1 2023, the cash conversion cycle turned positive at 17.60 days, indicating a slowdown in the conversion of resources into cash.
Comparing the latest quarter to the same quarter in the previous year, Essential Utilities Inc has made significant progress, as evidenced by the reduction in the cash conversion cycle from 36.40 days in Q4 2022 to -68.76 days in Q4 2023.
Overall, the trend of consistently improving cash conversion cycles suggests that Essential Utilities Inc is effectively managing its working capital and maximizing its cash flows, which can contribute to the company's financial stability and growth potential.
Peer comparison
Dec 31, 2023