CVS Health Corp (CVS)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 14.99 | 16.68 | 20.19 | 21.03 | 24.21 |
| Days of sales outstanding (DSO) | days | 43.50 | 39.91 | 34.78 | 34.76 | 32.52 |
| Number of days of payables | days | 13.15 | 13.79 | 15.70 | 14.85 | 14.58 |
| Cash conversion cycle | days | 45.34 | 42.81 | 39.28 | 40.94 | 42.15 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 14.99 + 43.50 – 13.15
= 45.34
The cash conversion cycle of CVS Health Corp has shown a fluctuating trend over the past five years, with a slight improvement from 42.15 days at the end of December 2020 to 40.94 days by December 31, 2021. Subsequently, the cycle decreased further to 39.28 days by the end of 2022, indicating improved efficiency in managing cash flows, receivables, and payables.
However, there was a slight increase in the cash conversion cycle to 42.81 days by December 31, 2023, followed by a more significant increase to 45.34 days by the end of 2024. This increase suggests a lengthening period between the company's cash outflows and inflows, which may indicate challenges in managing working capital effectively.
Overall, while the initial improvements in the cash conversion cycle were positive, the subsequent increases in the cycle towards the end of the period raise some concerns about the company's ability to efficiently convert its investments in inventory and receivables into cash. Further analysis of the underlying components contributing to these trends would be beneficial to assess the company's working capital management strategies and overall financial health.
Peer comparison
Dec 31, 2024