Jazz Pharmaceuticals PLC (JAZZ)

Cash conversion cycle

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Days of inventory on hand (DOH) days 231.76 221.99 225.73 296.92 371.16 450.51 455.01 444.67 482.19 521.78 603.84 697.27 888.34 1,170.68 1,814.97 262.69 233.82 248.77 273.67 253.88
Days of sales outstanding (DSO) days — — — — — — — — — — — — — — — — — — — —
Number of days of payables days — — — — — — — — — — — — — — — — — — — —
Cash conversion cycle days 231.76 221.99 225.73 296.92 371.16 450.51 455.01 444.67 482.19 521.78 603.84 697.27 888.34 1,170.68 1,814.97 262.69 233.82 248.77 273.67 253.88

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 231.76 + — – —
= 231.76

The cash conversion cycle of Jazz Pharmaceuticals PLC has shown fluctuations over the period from March 31, 2020, to December 31, 2024. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory into cash flows from sales.

Initially, the company's cash conversion cycle was around 250 days, indicating that it took approximately 250 days for Jazz Pharmaceuticals to convert its investment in inventory into cash. However, there were significant spikes in June 30, 2021, and September 30, 2021, where the cash conversion cycle surged to 1,814.97 days and 1,170.68 days, respectively. These unusually high numbers suggest inefficiencies in inventory management and collections processes during those periods.

Subsequently, there was a gradual improvement in the cash conversion cycle, with the company managing to reduce it to 225.73 days by June 30, 2024. This indicates that Jazz Pharmaceuticals became more efficient in managing its inventory, collecting receivables, and managing its payables, leading to a quicker conversion of investment in inventory into cash.

Overall, monitoring and managing the cash conversion cycle is crucial for Jazz Pharmaceuticals to ensure efficient working capital management and optimal cash flow operations. The improvement in the cash conversion cycle over time suggests that the company may have implemented strategies to enhance its liquidity position and operational efficiency.