Johnson & Johnson (JNJ)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	81.87	75.09	74.17	62.71	61.24
Days of sales outstanding (DSO)	days	61.14	64.61	74.26	59.75	60.30
Number of days of payables	days	67.84	64.69	71.43	66.75	62.30
Cash conversion cycle	days	75.17	75.01	77.00	55.72	59.25

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 81.87 + 61.14 – 67.84
= 75.17

The cash conversion cycle of Johnson & Johnson has varied over the years, indicating changes in the company's ability to efficiently convert its investments in inventory and accounts receivable into cash.

In 2020, the company's cash conversion cycle was 59.25 days, which decreased to 55.72 days by the end of 2021, showing an improvement in the efficiency of the company's cash management during that period.

However, in 2022, the cash conversion cycle increased significantly to 77.00 days, suggesting a potential slowdown in the company's cash conversion process. This trend continued in 2023 and 2024, with the cash conversion cycle remaining elevated at 75.01 days and 75.17 days, respectively.

The increase in the cash conversion cycle over these years may indicate potential issues in managing inventory levels, collecting accounts receivable, or extending payment terms to suppliers. Johnson & Johnson may need to review its working capital management practices to optimize its cash flow and boost overall financial efficiency.