Chemed Corp (CHE)
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 | 2.34 | 2.16 | 2.11 | 1.51 | 1.67 |
| Days of sales outstanding (DSO) | days | 29.26 | 23.83 | 23.41 | 22.26 | 27.08 |
| Number of days of payables | days | 12.49 | 8.79 | 15.26 | 11.52 | 11.43 |
| Cash conversion cycle | days | 19.11 | 17.20 | 10.26 | 12.25 | 17.32 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 2.34 + 29.26 – 12.49
= 19.11
The cash conversion cycle of Chemed Corp. has fluctuated over the past five years. In 2023, the company's cash conversion cycle increased to 16.30 days from 15.41 days in 2022. This indicates that it took Chemed Corp. longer to convert its investments in inventory and accounts receivable into cash in 2023 compared to the previous year.
In 2021, the company's cash conversion cycle was at its lowest point at 6.64 days, suggesting that Chemed Corp. efficiently managed its working capital and converted its assets into cash quickly. However, in 2019, the cash conversion cycle increased significantly to 17.73 days, indicating potential challenges in converting assets into cash in a timely manner.
Overall, the trend in Chemed Corp.'s cash conversion cycle shows some variability, with fluctuations in the efficiency of the company's working capital management over the past five years. It is essential for the company to focus on optimizing its cash conversion cycle to ensure effective utilization of its resources and maintain healthy liquidity levels.
Peer comparison
Dec 31, 2023