Cencora Inc. (COR)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 25.16 | 24.66 | 27.09 | 24.88 | 23.14 |
| Days of sales outstanding (DSO) | days | 29.22 | 28.49 | 31.37 | 27.55 | 25.18 |
| Number of days of payables | days | 66.07 | 63.70 | 67.01 | 62.65 | 59.39 |
| Cash conversion cycle | days | -11.69 | -10.55 | -8.55 | -10.22 | -11.07 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 25.16 + 29.22 – 66.07
= -11.69
The cash conversion cycle (CCC) measures how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter CCC indicates more efficient management of working capital.
Looking at the historical trend of Cencora Inc.'s cash conversion cycle, we can observe a significant decrease from 2021 to 2022, and then a further decrease from 2022 to 2023. The negative values indicate that the company has been able to convert its resources into cash at a faster pace.
In 2020, the cash conversion cycle was positive, indicating that it took the company 36.67 days to convert its investments into cash. However, this turned around in 2021 and has been consistently negative since then, indicating that the company has been able to generate cash from its operations before having to pay its suppliers and other short-term obligations.
The negative trend in the cash conversion cycle over the past three years suggests that Cencora Inc. has improved its efficiency in managing its working capital, which may be attributed to more effective inventory management, better receivables collection, or extended payables terms. This trend reflects positively on the company's liquidity and working capital management. However, it's important for Cencora Inc. to sustain this trend and ensure that it does not compromise its relationships with suppliers or customers in the process of optimizing its cash conversion cycle.
Peer comparison
Sep 30, 2023