Estee Lauder Companies Inc (EL)

Cash conversion cycle

		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	Sep 30, 2019
Days of inventory on hand (DOH)	days	51.40	56.26	63.35	68.16	71.74	75.51	75.69	74.14	70.85	67.13	62.31	64.41	63.95	73.39	73.18	73.94	67.64	53.04	52.73	56.16
Days of sales outstanding (DSO)	days	41.19	45.10	43.05	45.70	33.75	44.20	43.50	45.98	33.87	44.99	43.29	49.06	38.77	43.46	51.15	45.77	29.44	42.21	49.44	55.08
Number of days of payables	days	34.03	29.19	30.47	29.93	40.22	37.06	37.17	34.20	44.21	34.87	39.10	36.33	43.19	43.91	44.92	39.52	38.61	29.53	29.13	29.27
Cash conversion cycle	days	58.56	72.17	75.93	83.94	65.27	82.65	82.02	85.93	60.51	77.25	66.50	77.15	59.52	72.93	79.40	80.19	58.48	65.72	73.03	81.97

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 51.40 + 41.19 – 34.03
= 58.56

The cash conversion cycle of Estee Lauder Companies Inc fluctuated over the past several quarters, ranging from a low of 58.48 days to a high of 85.93 days. The company's cash conversion cycle measures how long it takes to convert its investments in inventory and receivables into cash inflows from sales. A shorter cash conversion cycle is generally more favorable as it indicates efficient management of working capital.

Analyzing the trend, we observe that the cash conversion cycle decreased in the most recent quarter to 58.56 days from 72.17 days in the prior quarter. This suggests an improvement in the company's working capital management efficiency, indicating a potential enhancement in inventory turnover and quicker collection of receivables.

However, it's important to note that the cash conversion cycle had shown fluctuations throughout the periods under review, implying potential variability in inventory management and accounts receivable collection processes. Further analysis and monitoring of these trends are essential to ensure sustained efficiency in working capital management for Estee Lauder Companies Inc.