Embecta Corp (EMBC)

Cash conversion cycle

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022
Days of inventory on hand (DOH)	days	81.93	76.69	63.22
Days of sales outstanding (DSO)	days	80.52	52.22	43.13
Number of days of payables	days	63.78	63.83	55.55
Cash conversion cycle	days	98.68	65.08	50.80

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 81.93 + 80.52 – 63.78
= 98.68

The cash conversion cycle of Embecta Corp has shown an increasing trend over the past three years. In September 2022, the company had a relatively low cash conversion cycle of 50.80 days, indicating that it took the company around 50.80 days to convert its investments in inventory and other resources back into cash. However, by September 2023, the cash conversion cycle had increased to 65.08 days, suggesting a longer period needed to complete this cash cycle.

By September 2024, the cash conversion cycle had further extended to 98.68 days, signaling that the company was taking longer to convert its investments into sales and then into actual cash inflows. This increasing trend in the cash conversion cycle may indicate potential inefficiencies in the company's working capital management or operational processes.

Overall, monitoring and managing the cash conversion cycle is crucial for Embecta Corp to ensure efficient use of resources, timely cash inflows, and sustainable business operations. The company may need to focus on optimizing inventory levels, managing receivables effectively, and streamlining its payment processes to improve its cash conversion cycle in the future.