Avantor Inc (AVTR)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	59.28	62.77	64.18	64.92	65.66	67.01	69.21	68.68	67.91	66.21	67.32	65.79	65.18	63.75	65.13	63.52	62.59	64.23	66.03	60.61
Days of sales outstanding (DSO)	days	55.66	58.21	60.37	60.05	60.26	59.64	61.85	63.49	59.20	58.95	60.95	65.03	60.39	59.48	65.78	65.85	63.56	61.77	59.59	62.51
Number of days of payables	days	53.71	54.23	53.03	45.93	49.63	51.68	53.37	58.17	56.37	56.25	58.28	60.08	56.44	52.78	58.50	57.70	57.45	55.03	51.99	53.97
Cash conversion cycle	days	61.23	66.76	71.52	79.05	76.29	74.97	77.69	74.00	70.74	68.90	69.99	70.75	69.13	70.45	72.41	71.67	68.69	70.97	73.62	69.15

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 59.28 + 55.66 – 53.71
= 61.23

The cash conversion cycle of Avantor Inc has shown some fluctuations over the period from March 31, 2020, to December 31, 2024. The cash conversion cycle is a metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

The trend in Avantor's cash conversion cycle indicates that the company's efficiency in managing its working capital has been somewhat inconsistent. Initially, the cash conversion cycle fluctuated within a relatively narrow range, but in the latter part of the period, there was more variability.

During the first half of the period, the cash conversion cycle remained around 70 days, indicating that it took the company approximately 70 days to convert its investments in inventory, accounts receivable, and accounts payable into cash flows from sales. However, in the latter part of the period, the cash conversion cycle showed more significant fluctuations, reaching a peak of 79.05 days on March 31, 2024, and dropping to 61.23 days on December 31, 2024.

These fluctuations may suggest changes in Avantor's inventory management, sales policies, or payment terms with customers and suppliers. A higher cash conversion cycle implies that the company takes longer to generate cash from its investments, which could potentially strain its liquidity and working capital management.

Overall, Avantor Inc should closely monitor its cash conversion cycle and work towards optimizing it by improving inventory turnover, accelerating accounts receivable collection, and extending accounts payable payment periods to enhance its overall cash flow and liquidity position.