Amgen Inc (AMGN)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	191.97	120.07	103.41	193.51	237.24
Days of sales outstanding (DSO)	days	113.38	45.50	41.95	76.43	72.68
Number of days of payables	days	32.07	38.29	34.57	70.63	90.75
Cash conversion cycle	days	273.28	127.29	110.79	199.31	219.17

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 191.97 + 113.38 – 32.07
= 273.28

AMGEN Inc.'s cash conversion cycle has shown fluctuations over the past five years. The company's cash conversion cycle increased from 248.82 days in 2019 to 224.91 days in 2021, indicating an improvement in the management of working capital. However, in 2023, the cash conversion cycle increased significantly to 438.74 days, suggesting a potential inefficiency in managing cash flows, accounts receivable, and inventory.

A prolonged cash conversion cycle may indicate issues with inventory management, slow collection of receivables, or delays in payment of payables, all of which can impact the company's liquidity and operational efficiency. It is essential for the company to closely monitor and optimize its cash conversion cycle to ensure effective management of working capital and sustainable operations.