Avantor Inc (AVTR)
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 | 65.66 | 67.91 | 65.18 | 62.59 | 63.01 |
| Days of sales outstanding (DSO) | days | 60.26 | 59.20 | 60.39 | 63.56 | 59.75 |
| Number of days of payables | days | 49.63 | 56.37 | 56.44 | 57.45 | 49.63 |
| Cash conversion cycle | days | 76.29 | 70.74 | 69.13 | 68.69 | 73.13 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 65.66 + 60.26 – 49.63
= 76.29
The cash conversion cycle of Avantor Inc has shown a fluctuating trend over the past five years. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
In the most recent year, as of December 31, 2023, the cash conversion cycle increased to 76.29 days, reflecting a longer period compared to the previous year. This indicates that Avantor Inc took longer to convert its resources into cash during the year, potentially facing challenges in managing inventory levels, collecting receivables, or extending payables.
Looking back over the five-year period, the cycle has generally been in the range of 68 to 76 days, with slight fluctuations from year to year. The company appeared to have improved its cash conversion efficiency in 2022 and 2023 compared to the earlier years, as the cycle decreased from its peak in 2019.
Overall, a longer cash conversion cycle suggests that Avantor Inc may need to optimize its working capital management strategies to enhance liquidity, reduce financing costs, and improve overall financial performance. It would be important for the company to continue monitoring and potentially improving its cash conversion cycle to ensure effective cash flow management and operational efficiency in the future.
Peer comparison
Dec 31, 2023