Balchem Corporation (BCPC)

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	64.44	65.99	59.79	53.73	70.83
Days of sales outstanding (DSO)	days	49.57	50.96	53.63	50.95	52.99
Number of days of payables	days	32.65	31.61	36.93	18.06	31.46
Cash conversion cycle	days	81.35	85.34	76.49	86.61	92.35

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 64.44 + 49.57 – 32.65
= 81.35

The cash conversion cycle for Balchem Corp. has shown fluctuations over the past five years. The cycle decreased from 92.35 days in 2019 to 76.49 days in 2021, indicating an improvement in the company's efficiency in managing its cash flows. However, the cycle increased slightly to 85.34 days in 2022 before decreasing again to 81.35 days in 2023.

A lower cash conversion cycle is generally favorable as it suggests that the company is able to convert its inventory and receivables into cash more quickly. Balchem Corp. seems to have made progress in this aspect over the years, particularly between 2019 and 2021. However, the slight increase in the cycle in 2022 followed by a moderate decrease in 2023 suggests some volatility in the company's cash conversion efficiency.

Overall, Balchem Corp. should continue to monitor and manage its cash conversion cycle effectively to ensure optimal cash flow management and operational efficiency.