Cardinal Health Inc (CAH)
Cash conversion cycle
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 28.65 | 24.88 | 29.70 | 32.65 | 34.21 |
| Days of sales outstanding (DSO) | days | 21.72 | 19.45 | 19.78 | 21.25 | 20.45 |
| Number of days of payables | days | 59.09 | 52.83 | 55.15 | 56.64 | 55.56 |
| Cash conversion cycle | days | -8.73 | -8.51 | -5.67 | -2.74 | -0.90 |
June 30, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 28.65 + 21.72 – 59.09
= -8.73
The analysis of Cardinal Health Inc.'s cash conversion cycle (CCC) over the period from June 30, 2021, to June 30, 2025, reveals a consistent trend toward increasing efficiency in managing the company's working capital cycle.
Initially, on June 30, 2021, the CCC was recorded at -0.90 days, indicating that the company was able to generate cash from its operational cycle slightly before settling its payables. This negative cycle status suggests efficient management of receivables and payables, enabling the company to effectively fund its operations without extensive reliance on external financing.
Over the subsequent years, the CCC demonstrated progressive improvement. By June 30, 2022, the negative cycle deepened to -2.74 days, and further extended to -5.67 days by June 30, 2023. The trend continued into 2024 and 2025, with the cycle reaching -8.51 days and -8.73 days, respectively. This consistent elongation of the negative cash conversion cycle indicates that the company is increasingly able to collect cash from its receivables well before disbursing payments to suppliers.
The trend suggests enhancements in receivables collection terms, reductions in inventory holding periods, or extended payment terms provided to suppliers, or a combination of these factors. The growing negativity of the CCC implies that Cardinal Health Inc. is effectively managing its working capital to optimize cash flow, reducing reliance on external financing and improving liquidity.
In summary, the observed trend reflects a strengthening in operational cash flow management, with the company consistently improving its ability to generate cash within its working capital cycle, thereby contributing to a more efficient capital structure over the analyzed period.
Peer comparison
Jun 30, 2025