Gilead Sciences Inc (GILD)

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	41.62	34.37	49.16	125.21	67.24
Days of sales outstanding (DSO)	days	64.85	66.01	62.30	72.46	58.24
Number of days of payables	days	12.81	20.64	21.42	62.79	52.00
Cash conversion cycle	days	93.66	79.74	90.04	134.88	73.48

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 41.62 + 64.85 – 12.81
= 93.66

The cash conversion cycle of Gilead Sciences, Inc. has displayed some fluctuation over the past five years. The company's cash conversion cycle increased significantly in 2020 to 139.30 days, indicating a delay in converting its investments in inventory and receivables into cash. This may have negatively impacted the company's liquidity and cash flow efficiency during that period.

However, in the subsequent years, Gilead Sciences managed to improve its cash conversion cycle, with a notable decrease in 2019 to 74.56 days. This reduction suggests that the company became more effective in managing its inventory, receivables, and payables, leading to a quicker conversion of these assets into cash.

In 2021 and 2022, the cash conversion cycle increased slightly to 110.54 days and 102.75 days, respectively. This may indicate that Gilead Sciences faced challenges in optimizing its working capital during those years.

By the end of 2023, the cash conversion cycle stood at 132.21 days, showing a slight increase compared to the previous year. This suggests that the company may need to focus on improving its working capital management to enhance its cash flow efficiency in the future.

In conclusion, Gilead Sciences, Inc. has experienced fluctuations in its cash conversion cycle over the past five years, indicating varying levels of efficiency in managing its working capital. Continuous monitoring and improvement in working capital practices may help the company enhance its cash conversion cycle and overall financial performance.