IDEXX Laboratories Inc (IDXX)

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	94.36	98.50	74.06	67.46	68.35
Days of sales outstanding (DSO)	days	47.30	48.67	44.02	47.32	43.95
Number of days of payables	days	27.45	29.52	31.97	23.96	25.30
Cash conversion cycle	days	114.21	117.66	86.11	90.81	87.01

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 94.36 + 47.30 – 27.45
= 114.21

The cash conversion cycle of Idexx Laboratories, Inc. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 114.21 days, indicating that it takes Idexx approximately 114 days to convert its investments in inventory and other resources into cash flows from sales. This was a slight improvement from 2022 when the cycle was 117.66 days.

Comparing to previous years, the company experienced a longer cash conversion cycle in 2021 at 86.11 days, which increased from 2020 (90.81 days) and 2019 (83.90 days). The longer cycle in 2021 suggests that Idexx Laboratories took more days to collect cash from its customers, manage its inventory, and pay off its suppliers, impacting the overall efficiency of the company's operations.

It is essential for Idexx Laboratories to monitor its cash conversion cycle closely to ensure effective cash flow management and operational efficiency. A shorter cash conversion cycle indicates that the company is able to generate cash quickly from its operating activities, which is a positive sign for financial health and sustainable growth.