Amphastar P (AMPH)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	156.70	139.81	138.29	136.50	131.72	145.88	144.30	150.26	151.16	150.19	143.97	142.04	142.31	157.39	163.69	163.56	171.15	201.29	195.64	207.93
Days of sales outstanding (DSO)	days	67.96	70.44	67.28	74.55	65.11	72.23	70.66	70.83	64.96	58.04	61.85	58.68	65.70	69.05	64.53	77.27	68.86	56.68	54.49	64.45
Number of days of payables	days	31.10	36.57	35.90	43.18	31.66	42.41	25.97	31.86	29.92	29.04	45.31	35.59	34.06	34.01	46.39	38.72	43.05	42.84	40.55	31.81
Cash conversion cycle	days	193.56	173.68	169.68	167.87	165.16	175.70	188.99	189.22	186.20	179.19	160.51	165.13	173.95	192.43	181.83	202.11	196.96	215.13	209.58	240.57

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 156.70 + 67.96 – 31.10
= 193.56

The cash conversion cycle of Amphastar P has shown a decreasing trend from 240.57 days on March 31, 2020, to 193.56 days on December 31, 2024. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

A shorter cash conversion cycle indicates that the company is able to efficiently manage its working capital and convert its investments into cash quickly, which is generally a positive sign. The decreasing trend observed in the cash conversion cycle suggests that Amphastar P has improved its efficiency in managing its inventory, accounts receivable, and accounts payable over time.

However, it is essential for the company to strike a balance in managing its cash conversion cycle. While a shorter cycle can indicate efficiency, an overly aggressive reduction may result in challenges such as stockouts or strained supplier relationships. Therefore, continuous monitoring and optimization of the cash conversion cycle are crucial to maintain a healthy cash flow and operational efficiency.