Arrowhead Pharmaceuticals Inc (ARWR)

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	—	—	17.84	26.65	39.07
Days of sales outstanding (DSO)	days	—	2.12	27.07	3.51	1.43
Number of days of payables	days	124.63	7.76	38.68	42.81	90.09
Cash conversion cycle	days	-124.63	-5.65	6.23	-12.65	-49.58

September 30, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + — – 124.63
= -124.63

The cash conversion cycle (CCC) of Arrowhead Pharmaceuticals Inc. measures the time it takes for the company to convert its resources (such as inventory and accounts payable) into cash flow from sales. A shorter CCC indicates more efficient management of working capital.

In 2023, Arrowhead Pharmaceuticals Inc. achieved a CCC of 0.00 days, signifying that the company efficiently converted its resources into sales and cash. This is a significant improvement from 2.12 days in 2022, indicating a more streamlined operational process.

In 2021, the CCC increased substantially to 27.07 days, suggesting a slowdown in the conversion of resources to sales and cash compared to the previous year. This may have been due to factors impacting the company's working capital management, such as increased inventory levels or slower collections from customers.

In 2020, the CCC was 3.51 days, showing a significant improvement compared to 2021. This indicates that the company managed to enhance its working capital efficiency, possibly through better inventory management or quicker collection of receivables.

In 2019, Arrowhead Pharmaceuticals Inc. achieved a CCC of 1.43 days, indicating efficient management of working capital, though slightly higher than the most recent year.

Overall, Arrowhead Pharmaceuticals Inc. has made significant improvements in its cash conversion cycle, particularly with the remarkable achievement of 0.00 days in 2023, highlighting the company's effective management of working capital, which ultimately leads to stronger cash flows and financial performance.