Becton Dickinson and Company (BDX)

Cash conversion cycle

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Days of inventory on hand (DOH)	days	78.79	65.36	70.66	58.58	117.83
Days of sales outstanding (DSO)	days	54.86	47.74	42.38	47.64	54.45
Number of days of payables	days	38.87	32.77	37.23	37.14	58.21
Cash conversion cycle	days	94.78	80.33	75.80	69.08	114.08

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 78.79 + 54.86 – 38.87
= 94.78

In analyzing Becton Dickinson and Company's cash conversion cycle over the past five years, we observe fluctuations in the efficiency of the company's working capital management. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and accounts receivable into cash flows from sales.

In the fiscal year ending September 30, 2024, Becton Dickinson and Company's cash conversion cycle increased to 94.78 days from 80.33 days in the previous year. This implies that the company took longer to convert its investments in inventory and accounts receivable into cash during the most recent fiscal year. This increase may indicate potential inefficiencies in managing inventory levels or extending credit to customers, leading to a longer operating cycle.

In the fiscal year ending September 30, 2023, the cash conversion cycle decreased to 80.33 days from 75.80 days in the previous year. This decrease suggests an improvement in the efficiency of the company's working capital management compared to the prior year, as the company was able to shorten the time it takes to convert investments into cash.

In the fiscal year ending September 30, 2022, Becton Dickinson and Company's cash conversion cycle further decreased to 75.80 days from 69.08 days in the prior year. This improvement indicates a continued focus on optimizing working capital management, resulting in a shorter cash conversion cycle.

In contrast, the fiscal year ending September 30, 2021, saw an increase in the cash conversion cycle to 69.08 days from 114.08 days in the previous year. This significant increase suggests a possible deterioration in working capital efficiency, as the company took longer to convert its investments into cash.

Overall, while there have been fluctuations in Becton Dickinson and Company's cash conversion cycle over the past five years, the trend indicates the company's efforts to manage its working capital effectively. Investors and stakeholders may want to monitor future trends in the cash conversion cycle as it can provide insights into the company's liquidity, operational efficiency, and overall financial performance.