Danaher Corporation (DHR)

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 50.49 44.79 47.73 46.83 42.02
Days of sales outstanding (DSO) days 60.42 57.20 57.81 67.16 65.46
Number of days of payables days 34.37 37.19 44.32 41.86 39.09
Cash conversion cycle days 76.54 64.80 61.23 72.13 68.39

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 50.49 + 60.42 – 34.37
= 76.54

The cash conversion cycle of Danaher Corp. has shown fluctuations over the past five years. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and accounts receivable into cash flows from sales.

In 2023, the cash conversion cycle increased to 90.59 days from 80.77 days in 2022. This indicates that Danaher Corp. took longer to convert its inventory and accounts receivable into cash in 2023 compared to the previous year.

In 2021, the cash conversion cycle was at its lowest at 63.67 days, reflecting an efficient management of inventory and receivables. However, there was an increase in 2022, followed by another increase in 2023, which may indicate potential challenges in managing working capital effectively.

Comparing to the baseline of 2019, the cash conversion cycle has increased gradually over the years, except for a decrease in 2021. This trend suggests that the company is taking longer to convert its investments into cash, which can impact liquidity and working capital management.

Overall, Danaher Corp. should focus on optimizing its cash conversion cycle to improve its efficiency in managing working capital and enhancing its cash flows in the future.


Peer comparison

Dec 31, 2023


See also:

Danaher Corporation Cash Conversion Cycle