Halozyme Therapeutics Inc (HALO)

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	110.68	108.22	147.57	86.96	61.06
Days of sales outstanding (DSO)	days	—	131.51	76.19	133.30	110.70
Number of days of payables	days	10.25	19.12	4.22	2.76	13.38
Cash conversion cycle	days	100.43	220.61	219.55	217.50	158.38

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 110.68 + — – 10.25
= 100.43

Halozyme Therapeutics Inc.'s cash conversion cycle has shown fluctuating trends over the past five years, ranging from 294.42 days in 2019 to 628.36 days in 2020. 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.

A shorter cash conversion cycle indicates that the company is able to generate cash quickly from its operational activities, which is generally considered more favorable. In this case, Halozyme Therapeutics Inc. experienced its most efficient cash conversion cycle in 2019, with 294.42 days.

Conversely, a longer cash conversion cycle, as seen in 2020 with 628.36 days, suggests potential inefficiencies in managing inventory, collecting receivables, or paying payables. It may indicate challenges in optimizing working capital and operating more efficiently.

In the most recent year, the company's cash conversion cycle improved to 322.79 days, suggesting some enhancements in its working capital management compared to the preceding year. Overall, a downward trend in the cash conversion cycle is desirable as it reflects improved liquidity and operating efficiency within the company.