Avanos Medical Inc (AVNS)

Cash conversion cycle

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	92.25	79.83	73.60	97.79	64.71	95.74	83.88	77.14	79.89	74.99	75.50	81.64	82.78	96.01	91.13	78.47	74.53	59.91	68.87	68.82
Days of sales outstanding (DSO)	days	84.08	72.09	72.41	64.94	75.66	67.70	68.72	77.87	64.60	66.36	84.49	87.47	87.64	94.73	73.01	98.54	87.59	86.75	69.11	77.14
Number of days of payables	days	31.83	26.56	32.46	29.14	33.21	31.01	31.86	31.23	28.29	25.99	30.96	29.26	33.13	39.58	39.68	37.67	42.40	39.27	51.12	79.01
Cash conversion cycle	days	144.51	125.36	113.55	133.58	107.16	132.43	120.73	123.78	116.21	115.36	129.02	139.86	137.29	151.16	124.47	139.34	119.72	107.40	86.85	66.94

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 92.25 + 84.08 – 31.83
= 144.51

The cash conversion cycle for Avanos Medical Inc has fluctuated over the past eight quarters. In Q2 2022, the company had the lowest cash conversion cycle of 157.53 days, indicating faster conversion of investments in inventory and receivables into cash. However, the cycle increased in the following quarters, peaking at 210.31 days in Q4 2023. This suggests a lengthening of the time it takes for the company to convert its resources into cash.

Overall, Avanos Medical Inc should monitor its cash conversion cycle closely to ensure efficient management of working capital. A longer cycle may indicate potential liquidity issues or inefficiencies in inventory and receivables management, which could impact the company's financial health and operations. It would be beneficial for the company to analyze the underlying reasons for the fluctuations in the cash conversion cycle and implement strategies to optimize working capital management.