Catalent Inc (CTLT)

Cash conversion cycle

		Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	58.39	61.12	80.82	84.11	88.80	87.99	84.65	93.27	82.18	80.37	79.29	85.15	82.56	77.66	41.38	37.49	32.12	27.78	55.14	48.87
Days of sales outstanding (DSO)	days	62.73	76.73	77.24	75.08	71.74	85.79	85.18	70.67	75.22	79.89	72.33	70.92	72.62	92.39	51.62	50.18	47.18	58.37	88.78	91.07
Number of days of payables	days	39.59	38.44	41.06	44.17	40.94	48.02	44.83	41.85	42.55	48.20	47.03	44.93	48.18	53.11	28.67	29.01	27.53	27.52	51.25	47.66
Cash conversion cycle	days	81.53	99.41	116.99	115.02	119.59	125.77	125.00	122.10	114.85	112.06	104.59	111.14	106.99	116.95	64.33	58.67	51.77	58.63	92.68	92.29

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 58.39 + 62.73 – 39.59
= 81.53

The cash conversion cycle for Catalent Inc has fluctuated over the past few years. It measures the time it takes for the company to convert its investments in inventory into cash receipts from customers.

We observe a general trend of increasing days in the cash conversion cycle from the end of 2019 to mid-2023, indicating potential inefficiencies in managing inventory, accounts receivable, and accounts payable during this period. However, from mid-2023 onwards, there is a notable improvement in the cash conversion cycle, suggesting the company may have implemented better inventory management and collection practices.

The peak of the cash conversion cycle was observed in March 2024 at 116.99 days, indicating a prolonged investment in inventory and delays in receiving cash from customers. Subsequently, there was a decrease in the cash conversion cycle to 81.53 days by the end of September 2024, signifying a more efficient cash flow management process.

Overall, it is essential for Catalent Inc to focus on maintaining a shorter cash conversion cycle to optimize its working capital efficiency and enhance overall liquidity management.