Amphastar P (AMPH)

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	131.72	151.16	142.31	171.15	211.79
Days of sales outstanding (DSO)	days	65.11	64.96	65.70	68.86	51.38
Number of days of payables	days	31.66	29.92	34.06	43.05	48.03
Cash conversion cycle	days	165.16	186.20	173.95	196.96	215.14

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 131.72 + 65.11 – 31.66
= 165.16

The cash conversion cycle of Amphastar Pharmaceuticals Inc has shown fluctuations over the past five years. In 2023, the cash conversion cycle decreased to 165.16 days compared to the previous year, indicating an improvement in the efficiency of managing cash flows. This was a positive trend as it suggests that the company was able to convert its inventory into cash more quickly.

In 2022, the cash conversion cycle increased to 186.20 days, which was higher than in 2021. This signifies a potential delay in the company's ability to collect cash from sales or convert inventory into sales efficiently. However, there was a notable improvement in 2021 compared to 2020 when the cash conversion cycle was at its highest level of 196.96 days.

Looking further back, in 2019, the cash conversion cycle was even higher at 215.14 days, indicating a longer period for the company to convert its investments in inventory and accounts receivable into cash flows. This suggests potential inefficiencies in managing working capital and operating cycles during that period.

Overall, it is important for Amphastar Pharmaceuticals Inc to monitor and potentially improve its cash conversion cycle to ensure effective management of working capital, reduce financing costs, and enhance overall operational efficiency.