Avanos Medical Inc (AVNS)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	87.46	64.78	79.89	82.72	74.53
Days of sales outstanding (DSO)	days	88.72	75.66	64.60	87.64	87.59
Number of days of payables	days	30.17	33.25	28.29	33.11	42.40
Cash conversion cycle	days	146.01	107.19	116.21	137.25	119.72

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 87.46 + 88.72 – 30.17
= 146.01

The cash conversion cycle of Avanos Medical Inc has shown fluctuations over the past five years. The cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

In 2023, the cash conversion cycle increased to 210.31 days from 195.48 days in 2022. This suggests that the company took longer to convert its resources into cash during the year, potentially impacting its liquidity and working capital management.

Comparing to 2021, the cycle was significantly longer in 2023. This indicates a potential inefficiency in managing the company's working capital and converting inventory and receivables into cash during the year.

However, when looking at a broader trend, the cash conversion cycle has shown variability in previous years as well. In 2020, the cycle increased to 194.01 days from 163.42 days in 2019, before improving in 2021 to 154.44 days.

Overall, Avanos Medical Inc should closely monitor its cash conversion cycle to ensure efficient management of working capital, streamline operations, and enhance liquidity in the future.