Embecta Corp (EMBC)

Cash conversion cycle

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022
Days of inventory on hand (DOH)	days	72.82	76.65	175.05	167.76	163.11	182.06
Days of sales outstanding (DSO)	days	67.46	52.07	62.48	49.96	47.20	43.25
Number of days of payables	days	48.66	63.80	128.18	134.97	121.59	159.97
Cash conversion cycle	days	91.62	64.92	109.35	82.75	88.72	65.34

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 72.82 + 67.46 – 48.66
= 91.62

Based on the data provided, the cash conversion cycle of Embecta Corp has been fluctuating over the past few quarters. In general, the cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In December 2021, the cash conversion cycle stood at 65.34 days, indicating that it took the company approximately 65 days to convert its investments into cash. This cycle increased to 88.72 days by the end of March 2022, suggesting a slowdown in the conversion process. However, by the end of June 2022, the cycle decreased to 82.75 days, showing some improvement in efficiency.

The September 2022 data showed the cash conversion cycle further decreasing to 64.92 days, indicating a relatively efficient conversion process compared to previous quarters. However, by December 2022, the cycle increased again to 91.62 days, suggesting a reversal in efficiency in converting investments into cash flows.

Overall, the fluctuation in the cash conversion cycle of Embecta Corp over the quarters indicates potential challenges in managing inventory levels, collecting receivables, and paying suppliers efficiently. Further analysis of the underlying factors contributing to these fluctuations would be necessary to identify potential areas for improvement in working capital management.