Aramark Holdings (ARMK)

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	8.11	13.17	13.03	12.51	9.79
Days of sales outstanding (DSO)	days	37.35	49.18	54.00	42.00	41.15
Number of days of payables	days	25.54	31.55	29.01	19.02	23.79
Cash conversion cycle	days	19.92	30.81	38.02	35.49	27.16

September 30, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 8.11 + 37.35 – 25.54
= 19.92

The cash conversion cycle of Aramark Holdings has shown a decreasing trend over the past five years, indicating an improvement in the company's efficiency in managing its working capital. The company's ability to convert its resources into cash has been enhancing, as evidenced by the decreasing number of days it takes to convert its investments in inventory and accounts payable into cash.

In 2023, the cash conversion cycle further decreased to 19.92 days, reflecting Aramark's effectiveness in managing its cash flow and working capital. This improvement signifies the company's ability to efficiently generate cash from its operational activities, possibly through better inventory and accounts payable management.

Overall, the decreasing trend in the cash conversion cycle suggests that Aramark Holdings has been optimizing its working capital management practices, which is essential for maintaining financial stability and liquidity in the long run.