Henry Schein Inc (HSIC)
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 | 56.46 | 59.94 | 58.10 | 56.87 | 55.54 |
| Days of sales outstanding (DSO) | days | 55.50 | 41.76 | 42.79 | 51.59 | 44.66 |
| Number of days of payables | days | 31.73 | 30.66 | 32.91 | 37.81 | 34.22 |
| Cash conversion cycle | days | 80.23 | 71.04 | 67.99 | 70.65 | 65.98 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 56.46 + 55.50 – 31.73
= 80.23
The cash conversion cycle for Henry Schein Inc has slightly increased over the past five years, indicating that the company is taking longer to convert its investments in inventory into cash. The cycle lengthened from 65.98 days in 2019 to 80.23 days in 2023. This trend suggests that the company may be facing challenges in efficiently managing its inventory, accounts receivable, and accounts payable.
A longer cash conversion cycle can tie up working capital and potentially lead to liquidity issues if not managed effectively. It may also indicate inefficiencies in the company's supply chain or difficulties in collecting cash from customers in a timely manner.
A thorough analysis of the components of the cash conversion cycle, including inventory turnover, accounts receivable turnover, and accounts payable turnover, would provide additional insights into the underlying factors driving the changes in the cycle duration. Further investigation and potential strategic adjustments may be warranted to optimize cash flow and working capital management within Henry Schein Inc.
Peer comparison
Dec 31, 2023