Cardinal Health Inc (CAH)
Cash conversion cycle
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 24.88 | 29.70 | 32.65 | 34.21 | 32.98 |
| Days of sales outstanding (DSO) | days | 19.45 | 19.78 | 21.25 | 20.45 | 19.72 |
| Number of days of payables | days | 52.83 | 55.15 | 56.64 | 55.56 | 53.42 |
| Cash conversion cycle | days | -8.51 | -5.67 | -2.74 | -0.90 | -0.71 |
June 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 24.88 + 19.45 – 52.83
= -8.51
The cash conversion cycle of Cardinal Health Inc has shown a consistent improvement over the past five years. The company's cash conversion cycle has decreased from negative 0.71 days in 2020 to negative 8.51 days in 2024. This indicates that Cardinal Health has been able to manage its working capital more efficiently over the years.
A negative cash conversion cycle implies that the company's operating cycle (the time it takes to convert inventory into cash) is shorter than its payables deferral period (the time it takes to pay suppliers). This suggests that Cardinal Health is able to collect cash from its sales before it needs to pay its suppliers, which can be beneficial for its cash flow management.
The steady improvement in the cash conversion cycle indicates that Cardinal Health has been operating more efficiently in terms of managing its inventory, receivables, and payables. This trend suggests that the company has been able to optimize its working capital and liquidity position, which can contribute to its overall financial health and operational performance.
Peer comparison
Jun 30, 2024