Air Products and Chemicals Inc (APD)

Cash conversion cycle

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Days of inventory on hand (DOH)	days	30.26	23.55	18.05	20.50	25.22
Days of sales outstanding (DSO)	days	60.86	56.78	53.16	54.50	56.45
Number of days of payables	days	57.35	43.82	39.35	33.28	34.03
Cash conversion cycle	days	33.77	36.51	31.86	41.72	47.64

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 30.26 + 60.86 – 57.35
= 33.77

The cash conversion cycle of Air Products and Chemicals Inc has shown a fluctuating trend over the past five years. The cycle measures how long it takes for the company to convert its investments in inventory and other resources into cash flow from sales.

In 2020, the company had a relatively long cash conversion cycle of 47.64 days, indicating that it took almost two months to convert investments into cash. However, over the next four years, the company managed to improve its cash conversion cycle, reaching a low of 31.86 days in 2022. This improvement suggests that the company has become more efficient in managing its working capital and converting its resources into cash.

In 2023, there was a slight increase in the cash conversion cycle to 36.51 days, which may warrant further analysis to understand the factors driving this change. The cycle decreased again in 2024 to 33.77 days, indicating some improvement in efficiency compared to the previous year.

Overall, Air Products and Chemicals Inc has shown a general trend towards a more efficient cash conversion cycle over the past five years, which is a positive indicator of the company's working capital management and operational efficiency. However, it is important for the company to continue monitoring and improving its cash conversion cycle to ensure optimal financial performance.