Eli Lilly and Company (LLY)

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	144.35	116.34	98.50	121.96	101.04
Days of sales outstanding (DSO)	days	121.25	88.19	86.01	87.39	74.36
Number of days of payables	days	64.98	52.11	42.35	49.23	44.50
Cash conversion cycle	days	200.62	152.41	142.16	160.12	130.90

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 144.35 + 121.25 – 64.98
= 200.62

Lilly(Eli) & Co's cash conversion cycle has fluctuated over the past five years, reflecting changes in the company's efficiency in managing its working capital. In 2023, the cash conversion cycle increased to 284.84 days, indicating that it took the company longer to convert its investments in inventory and receivables into cash during the year. This may suggest inefficiencies in inventory management or a longer cash collection period.

However, in 2022, the company was able to improve its cash conversion cycle to 240.44 days, showing a more efficient use of working capital compared to the previous year. This improvement could be attributed to better inventory turnover or quicker collection of receivables.

In 2021, the cash conversion cycle further decreased to 215.33 days, indicating that the company was able to optimize its working capital management even further. This shorter cycle suggests that Lilly(Eli) & Co was able to convert its investments into cash more swiftly, potentially improving its liquidity position.

The cash conversion cycle increased in 2020 compared to the previous year, reaching 261.06 days. This rise may indicate challenges in managing working capital efficiently during the year, leading to a longer cash conversion cycle.

In 2019, the cash conversion cycle stood at 228.65 days, reflecting an average efficiency in working capital management compared to the other years analyzed.

Overall, Lilly(Eli) & Co's cash conversion cycle has shown fluctuations over the past five years, with improvements in working capital management in some years and challenges in others. Analyzing the trend over time can help stakeholders assess the company's effectiveness in converting investments in inventory and receivables into cash.