Essential Utilities Inc (WTRG)
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 | 32.82 | 35.92 | 28.85 | 24.93 | 40.47 | 39.92 | 32.87 | 28.24 | 59.97 | 77.62 | 45.07 | 21.47 | 44.89 | 49.19 | 27.79 | 15.27 | 30.70 | 45.90 | 39.85 | 33.17 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 32.82 | 35.92 | 28.85 | 24.93 | 40.47 | 39.92 | 32.87 | 28.24 | 59.97 | 77.62 | 45.07 | 21.47 | 44.89 | 49.19 | 27.79 | 15.27 | 30.70 | 45.90 | 39.85 | 33.17 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 32.82 + — – —
= 32.82
The cash conversion cycle provides insight into Essential Utilities Inc's efficiency in managing its working capital. From the data provided, we observe fluctuations in the cash conversion cycle over the quarters.
The trend indicates that the company's cash conversion cycle was relatively stable in the earlier periods, averaging around 30-40 days. However, in the latter periods, notably from September 2021 onwards, there was an increasing trend in the cash conversion cycle, reaching a peak of 77.62 days by September 30, 2022.
This increase suggests that Essential Utilities Inc may be taking longer to convert its investments in inventory and accounts receivable into cash. A longer cash conversion cycle could indicate inefficiencies in managing working capital or possible issues with inventory turnover and collections from customers.
It is essential for the company to closely monitor and manage its cash conversion cycle to ensure optimal working capital management. By analyzing the factors contributing to the prolonged cycle and implementing strategies to streamline processes, Essential Utilities Inc can enhance its liquidity and overall financial performance.
Peer comparison
Dec 31, 2024