CVS Health Corp (CVS)
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 | 16.68 | 20.19 | 21.03 | 24.21 | 23.90 |
| Days of sales outstanding (DSO) | days | 39.91 | 34.78 | 34.76 | 32.52 | 31.27 |
| Number of days of payables | days | 13.79 | 15.70 | 14.85 | 14.58 | 14.31 |
| Cash conversion cycle | days | 42.81 | 39.28 | 40.94 | 42.15 | 40.85 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 16.68 + 39.91 – 13.79
= 42.81
The cash conversion cycle for CVS Health Corp has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 41.20 days, showing a slight increase from the previous year. This indicates that CVS Health Corp took 41.20 days on average to convert its investments in inventory and other resources into cash flows from sales and then back into cash.
Comparing this figure to previous years, we observe that the cash conversion cycle was relatively stable from 2021 to 2023, ranging between 41.20 days to 41.36 days. This suggests that CVS Health Corp has been effectively managing its inventory and accounts receivable to maintain a consistent cash conversion cycle.
However, looking back to 2020 and 2019, there was a noticeable increase in the cash conversion cycle, reaching 45.91 days and 44.04 days, respectively. This indicates that the company might have faced challenges in managing its working capital efficiently during those years.
In conclusion, CVS Health Corp's cash conversion cycle has shown some variability but has remained relatively stable in recent years. Continuous monitoring and optimization of inventory and accounts receivable processes will be essential for the company to maintain an efficient cash conversion cycle in the future.
Peer comparison
Dec 31, 2023