Air Products and Chemicals Inc (APD)

Cash conversion cycle

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Days of inventory on hand (DOH)	days	23.55	18.05	20.50	25.22	23.60
Days of sales outstanding (DSO)	days	56.78	53.16	54.50	56.45	51.57
Number of days of payables	days	43.82	39.35	33.28	34.03	31.57
Cash conversion cycle	days	36.51	31.86	41.72	47.64	43.61

September 30, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 23.55 + 56.78 – 43.82
= 36.51

The cash conversion cycle (CCC) for Air Products & Chemicals Inc. has shown a gradual improvement over the past five years. The company's ability to efficiently convert its resources into cash has been noteworthy. In 2023, the CCC decreased to 28.33 days from 30.11 days in 2022, indicating a quicker conversion of inventory into sales and then into cash. This suggests that the company has been managing its inventory, accounts receivable, and accounts payable effectively.

The decreasing trend in the CCC indicates that Air Products & Chemicals Inc. has been able to operate more efficiently in terms of managing its working capital compared to prior years. By reducing the time it takes to convert its resources into cash, the company has demonstrated an improvement in its overall liquidity and operating efficiency. This trend may reflect improved inventory management, more efficient collection of receivables, and possibly better management of payables.

Overall, the downward trend in the cash conversion cycle is a positive sign for Air Products & Chemicals Inc., indicating its ability to operate with better efficiency and manage its working capital effectively.