Boston Scientific Corp (BSX)

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	86.05	71.87	63.39	56.87	72.37
Days of sales outstanding (DSO)	days	58.19	58.99	55.83	58.50	68.18
Number of days of payables	days	32.63	33.18	31.26	21.59	24.84
Cash conversion cycle	days	111.61	97.67	87.95	93.78	115.71

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 86.05 + 58.19 – 32.63
= 111.61

The cash conversion cycle of Boston Scientific Corp. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle stood at 186.64 days, indicating the average number of days it takes for the company to convert its investments in inventory into cash flows from sales. This represents an increase from the previous year's figure of 149.42 days.

Comparing the data over the past five years, it is observed that the company's cash conversion cycle has generally been trending upwards since 2020, reaching its peak in 2023. A longer cash conversion cycle may suggest inefficiencies in managing inventory, collecting receivables, or delaying payment to suppliers, which can tie up a company's cash flow.

It is essential for Boston Scientific Corp. to focus on optimizing its working capital management to potentially reduce its cash conversion cycle and enhance its liquidity position. This could involve implementing strategies to improve inventory turnover, expedite accounts receivable collection, and negotiate favorable payment terms with suppliers. A shorter cash conversion cycle would allow the company to free up cash for other investments or operational needs, ultimately improving its overall financial health and efficiency.