Linde plc Ordinary Shares (LIN)

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	31.54	26.20	24.86	26.69	24.22
Days of sales outstanding (DSO)	days	52.81	50.00	53.68	56.42	56.07
Number of days of payables	days	45.03	39.68	50.24	47.77	46.61
Cash conversion cycle	days	39.32	36.52	28.29	35.33	33.68

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 31.54 + 52.81 – 45.03
= 39.32

The cash conversion cycle of Linde Plc. has fluctuated over the past five years, as shown in the table. In 2023, the cash conversion cycle increased to 35.51 days, up from 33.25 days in 2022. This suggests that the company took longer to convert its investments in inventory and accounts receivable into cash during 2023.

Compared to 2021 when the cash conversion cycle was 18.82 days, the cycle has increased significantly, indicating a potential slowdown in Linde's cash conversion efficiency. However, the cash conversion cycle was higher in 2020 at 26.91 days before declining in 2021, indicating some level of variability in the company's cash conversion efficiency over these years.

When compared to 2019, when the cash conversion cycle was 25.03 days, the observed trend suggests a gradual increase in the time taken by Linde Plc. to convert its investments in inventory and accounts receivable into cash over the past five years.

Overall, it is important for investors and stakeholders to monitor Linde Plc.'s cash conversion cycle closely as it provides insights into the company's liquidity management and efficiency in converting its operating activities into cash.