Laboratory Corporation of America Holdings (LH)
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 | 19.69 | 21.06 | 13.96 | 17.11 | 10.76 |
| Days of sales outstanding (DSO) | days | 57.20 | 68.04 | 50.89 | 64.75 | 48.77 |
| Number of days of payables | days | 34.34 | 38.14 | 21.60 | 25.84 | 27.80 |
| Cash conversion cycle | days | 42.55 | 50.96 | 43.24 | 56.03 | 31.73 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 19.69 + 57.20 – 34.34
= 42.55
The cash conversion cycle of Laboratory Corp. Of America Holdings has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 48.34 days, indicating an improvement from the previous year's figure of 57.88 days. This could suggest that the company is managing its cash flow more efficiently in converting its investments in inventory and accounts receivable into cash.
Looking back to 2021 and 2020, the cash conversion cycle was 59.79 days and 70.05 days respectively, both higher than the most recent data. This may indicate potential inefficiencies in the company's working capital management during those years.
In 2019, the cash conversion cycle was 46.94 days, similar to the figure observed in 2023. This suggests that the company has been able to maintain a relatively efficient cash conversion cycle over the years, with periodic fluctuations.
Overall, the trend indicates that Laboratory Corp. Of America Holdings has made improvements in its cash conversion cycle in 2023 compared to the previous year, which could be attributed to better management of inventory and accounts receivable, potentially leading to improved liquidity and operational efficiency.
Peer comparison
Dec 31, 2023