Harmony Biosciences Holdings (HRMY)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 5.80 | 5.81 | 7.85 | 10.48 |
| Days of sales outstanding (DSO) | days | 49.34 | 47.68 | 49.85 | 60.09 |
| Number of days of payables | days | 19.16 | 5.12 | 1.77 | 7.01 |
| Cash conversion cycle | days | 35.97 | 48.37 | 55.93 | 63.57 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 5.80 + 49.34 – 19.16
= 35.97
The cash conversion cycle of Harmony Biosciences Holdings Inc has shown a significant improvement over the past three years, decreasing from 67.34 days in 2020 to 9.26 days in 2023. This indicates that the company has become more efficient in managing its cash flow and working capital.
A shorter cash conversion cycle suggests that Harmony Biosciences is taking less time to convert its investments in inventory and other resources into cash from sales. This could be attributed to more effective inventory management, faster collection of receivables, and/or increased efficiency in payment of payables.
The substantial decrease in the cash conversion cycle from 2020 to 2023 indicates that Harmony Biosciences has been able to streamline its operations and improve liquidity position. A shorter cash conversion cycle generally implies better financial health and operational efficiency for the company.
Overall, the trend in Harmony Biosciences' cash conversion cycle reflects positive developments in the company's working capital management and ability to convert resources into cash efficiently.
Peer comparison
Dec 31, 2023