Johnson & Johnson (JNJ)

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	82.16	84.14	81.86	73.09	92.91	95.25	112.37	114.12	66.94	72.01	68.02	65.80	63.82	64.53	63.54	65.06	61.45	87.20	86.17	79.28
Days of sales outstanding (DSO)	days	61.25	67.44	66.85	61.32	61.25	61.96	71.24	—	67.58	—	—	—	59.75	—	—	—	—	—	—	—
Number of days of payables	days	68.07	59.78	59.52	52.49	80.04	71.06	91.06	88.28	64.47	62.63	58.07	55.74	67.92	55.67	54.76	55.59	62.51	63.99	61.86	66.25
Cash conversion cycle	days	75.33	91.80	89.20	81.92	74.12	86.14	92.55	25.84	70.05	9.39	9.94	10.07	55.65	8.86	8.78	9.47	-1.06	23.21	24.31	13.03

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 82.16 + 61.25 – 68.07
= 75.33

The cash conversion cycle of Johnson & Johnson has shown some fluctuations over the periods analyzed. The cash conversion cycle is a measure of how efficiently a company manages its working capital, representing the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

From March 2020 to June 2022, the cash conversion cycle remained relatively stable, ranging from approximately 8 to 13 days, indicating efficient management of working capital during this period. However, by the end of December 2022, the cash conversion cycle increased significantly to 70.05 days, which suggests a potential slowdown in the company's ability to convert its resources into cash.

The trend continued to worsen in the subsequent periods, with the cash conversion cycle reaching peaks of 92.55 days in June 2023 and 91.80 days in September 2024. These prolonged cycles may indicate issues with inventory management, sales collection, or payment practices that could impact the company's liquidity and overall financial performance.

It is important for Johnson & Johnson to closely monitor and address the factors contributing to the extended cash conversion cycle to ensure optimal working capital management and sustained financial health. A prolonged cash conversion cycle can tie up valuable resources and lead to cash flow constraints, affecting the company's ability to invest in growth opportunities or meet its obligations in a timely manner.