Baxter International Inc (BAX)

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	64.10	53.34	77.61	66.24	55.63
Days of sales outstanding (DSO)	days	70.80	68.55	81.08	35.25	32.86
Number of days of payables	days	28.17	22.10	39.42	36.06	30.02
Cash conversion cycle	days	106.73	99.79	119.27	65.44	58.47

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 64.10 + 70.80 – 28.17
= 106.73

The cash conversion cycle of Baxter International Inc. has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 125.01 days from 123.54 days in 2022. This means that it took Baxter International Inc. 125.01 days to convert its investments in inventory, accounts receivable, and accounts payable into cash.

Comparing to 2021, where the cash conversion cycle was 132.43 days, the company improved its efficiency in managing its working capital as it reduced the number of days taken to convert its assets into cash.

In 2020 and 2019, Baxter International Inc. had a cash conversion cycle of 109.91 days and 102.99 days, respectively, indicating that the company was more efficient in managing its working capital in those years compared to the later years.

Overall, Baxter International Inc. should focus on optimizing its cash conversion cycle to improve its working capital management efficiency, which could potentially lead to better cash flow and liquidity.