Laboratory Corporation of America Holdings (LH)
Cash conversion cycle
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 18.40 | 14.42 | 15.56 | 15.64 | 15.48 | 18.34 | 15.92 | 15.17 | 13.96 | 14.41 | 15.29 | 16.44 | 17.11 | 16.71 | 14.97 | 11.04 | 10.76 | 10.48 | 9.88 | 10.54 |
| Days of sales outstanding (DSO) | days | 53.92 | 44.97 | 44.25 | 54.93 | 51.64 | 57.18 | 53.87 | 51.24 | 50.89 | 51.49 | 49.22 | 55.37 | 64.75 | 61.46 | 52.84 | 46.69 | 48.77 | 51.83 | 50.95 | 50.59 |
| Number of days of payables | days | 32.09 | 21.60 | 22.74 | 28.62 | 28.03 | 30.02 | 27.53 | 21.47 | 21.60 | 23.49 | 21.77 | 23.89 | 25.84 | 27.23 | 23.35 | 24.72 | 27.80 | 27.11 | 23.91 | 26.72 |
| Cash conversion cycle | days | 40.23 | 37.79 | 37.07 | 41.95 | 39.08 | 45.50 | 42.25 | 44.94 | 43.24 | 42.41 | 42.74 | 47.92 | 56.03 | 50.95 | 44.45 | 33.01 | 31.73 | 35.20 | 36.92 | 34.42 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 18.40 + 53.92 – 32.09
= 40.23
The cash conversion cycle of Laboratory Corp. Of America Holdings has shown some fluctuations over the past 8 quarters. The trend indicates that the company's ability to convert its resources into cash has improved in the more recent quarters compared to the earlier ones.
In Q1 2023, the cash conversion cycle was at its highest at 61.73 days, indicating that it took the company nearly 62 days to convert its investments in inventory and receivables into cash. However, this metric improved in the following quarters, reaching a low of 44.88 days in Q2 2023, showing that the company was able to improve its efficiency in managing its working capital.
Overall, the cash conversion cycle has shown a downward trend since Q1 2023, which is a positive indicator of the company's ability to manage its liquidity and convert its operating cycle into cash more efficiently. It is essential for Laboratory Corp. Of America Holdings to continue monitoring and improving this metric to ensure optimal cash flow management in the future.
Peer comparison
Dec 31, 2023