Amcor PLC (AMCR)
Cash conversion cycle
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 57.48 | 54.60 | 64.81 | 60.00 | 67.33 |
| Days of sales outstanding (DSO) | days | 50.77 | 46.87 | 49.04 | 53.40 | 47.31 |
| Number of days of payables | days | 73.02 | 70.50 | 81.65 | 77.57 | 79.79 |
| Cash conversion cycle | days | 35.23 | 30.96 | 32.19 | 35.83 | 34.85 |
June 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 57.48 + 50.77 – 73.02
= 35.23
The cash conversion cycle of Amcor PLC has fluctuated over the past five years. In the most recent fiscal year ending June 30, 2024, the company's cash conversion cycle was 35.23 days, which represents the time it takes for Amcor to convert its investments in inventory and other resources into cash flows from sales.
Comparing this figure to the previous years, we observe a slight increase from the prior year's 30.96 days. This suggests that Amcor may be taking slightly longer to convert its investments into cash in the most recent year. However, when looking at a longer-term trend, the cash conversion cycle has generally remained relatively stable over the past five years, varying between 30 and 36 days.
Analyzing the cash conversion cycle can provide insights into the efficiency of Amcor's working capital management and the effectiveness of its operations in generating cash flows. A longer cash conversion cycle may indicate inefficiencies in managing inventory, accounts receivable, or accounts payable, potentially impacting the company's liquidity and overall financial health. On the other hand, a shorter cash conversion cycle may signal effective working capital management and better cash flow generation.
It would be beneficial for Amcor PLC's management to further investigate the factors contributing to the recent increase in the cash conversion cycle and take appropriate actions to optimize working capital efficiency and improve cash flow conversion in the future.
Peer comparison
Jun 30, 2024