Hologic Inc (HOLX)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 115.08 | 122.04 | 99.61 | 93.11 | 73.93 |
| Days of sales outstanding (DSO) | days | 56.66 | 47.90 | 61.09 | 99.45 | 70.32 |
| Number of days of payables | days | 32.64 | 38.68 | 42.91 | 42.13 | 30.99 |
| Cash conversion cycle | days | 139.09 | 131.25 | 117.79 | 150.42 | 113.26 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 115.08 + 56.66 – 32.64
= 139.09
The cash conversion cycle (CCC) of Hologic, Inc. has shown variability over the past five years. The CCC reflects the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales. In 2023, the CCC increased to 159.26 days from 146.52 days in 2022, indicating that the company took longer to convert its investments into cash. This increase may be attributed to factors such as changes in inventory management, credit terms with customers, or collection periods.
Comparing the 2023 and 2021 figures, it is evident that the CCC has been on a rising trend, indicating a potential inefficiency in managing the company's working capital. However, it is worth noting that the CCC in 2023 is lower than the figure reported in 2020, when it reached 161.62 days. This suggests that there may have been improvements in inventory turnover, accounts receivable collection, or payment of accounts payable.
In 2019, the CCC was at its lowest at 116.63 days, indicating a more efficient conversion of resources into cash. It is important for Hologic, Inc. to carefully analyze the reasons behind the fluctuations in the CCC and identify areas for improvement in working capital management, with the aim of optimizing cash flows and overall financial performance.
Overall, the trend in Hologic's cash conversion cycle indicates the need for continuous monitoring and potential adjustments to improve working capital efficiency.
Peer comparison
Sep 30, 2023