Abbott Laboratories (ABT)

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	76.40	76.55	79.01	75.60	68.44	63.96	67.17	65.88	60.84	63.66	67.89	72.53	70.90	76.67	78.93	68.81	65.74	67.72	67.83	63.58
Days of sales outstanding (DSO)	days	60.77	60.32	56.91	53.71	52.67	52.58	58.36	59.57	55.66	55.97	56.20	60.45	68.71	64.81	60.53	61.10	63.08	64.50	66.80	64.90
Number of days of payables	days	49.95	45.60	48.42	47.21	51.08	46.10	51.16	55.06	52.00	48.61	50.14	54.75	55.82	47.46	50.60	47.92	49.53	46.70	50.22	47.39
Cash conversion cycle	days	87.23	91.28	87.49	82.10	70.03	70.44	74.37	70.38	64.49	71.02	73.95	78.24	83.79	94.02	88.86	81.99	79.29	85.52	84.42	81.08

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 76.40 + 60.77 – 49.95
= 87.23

The cash conversion cycle of Abbott Laboratories has shown some variability over the past eight quarters, ranging from a low of 76.69 days in Q1 2022 to a high of 113.85 days in Q3 2023. This metric measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

A longer cash conversion cycle indicates that the company takes more time to turn its investments into cash, which may result in liquidity challenges or increased working capital needs. Conversely, a shorter cash conversion cycle suggests that the company is able to efficiently manage its working capital and generate cash from its operations.

Overall, Abbott Laboratories has experienced fluctuations in its cash conversion cycle, with periods of increased operational efficiency followed by intervals of slower cash conversion. Management should continue to monitor this metric to ensure optimal working capital management and sustained cash flow generation.