Amgen Inc (AMGN)

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	194.11	118.99	120.83	124.75	124.82	121.95	116.31	111.05	103.07	121.01	138.46	163.62	193.51	205.11	217.47	225.19	237.24	224.61	215.03	200.66
Days of sales outstanding (DSO)	days	111.60	121.73	115.26	113.90	125.10	38.04	38.02	36.05	41.49	68.28	64.15	64.15	76.43	59.80	80.60	76.29	72.68	56.26	58.88	57.95
Number of days of payables	days	32.43	32.15	29.42	32.86	39.80	30.87	32.08	35.32	34.46	34.13	42.97	56.86	70.63	60.41	65.13	81.83	90.75	69.61	67.77	72.59
Cash conversion cycle	days	273.28	208.57	206.67	205.79	210.13	129.13	122.25	111.78	110.10	155.16	159.64	170.91	199.31	204.50	232.94	219.64	219.17	211.26	206.14	186.03

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 194.11 + 111.60 – 32.43
= 273.28

The cash conversion cycle 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 typically indicates inefficiencies in managing working capital and may lead to increased financing costs.

Analyzing the trend in AMGEN Inc.'s cash conversion cycle over the past eight quarters shows fluctuations in the efficiency of its working capital management. The company's cash conversion cycle ranged from a low of 238.68 days in Q1 2022 to a high of 438.74 days in Q4 2023.

The increase in the cash conversion cycle from Q1 2022 to Q4 2023 highlights a potential concern as it indicates a longer period for the company to collect cash from its sales and convert inventory back into cash. This could suggest challenges in managing inventory levels, receivables collection, or optimizing payment terms with suppliers.

Investors and stakeholders may want to closely monitor AMGEN Inc.'s working capital management practices to ensure efficiency in converting investments into cash flows and to address any potential operational inefficiencies that could impact the company's financial health.