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