Eli Lilly and Company (LLY)

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	144.35	126.50	126.00	125.24	116.34	99.12	103.61	99.07	98.50	104.02	102.22	105.01	121.96	133.35	128.90	120.33	120.63	112.52	108.27	97.49
Days of sales outstanding (DSO)	days	121.25	117.94	113.42	118.92	88.19	103.92	96.33	97.16	86.01	92.37	94.27	95.36	87.39	91.90	91.86	100.43	74.36	92.54	94.14	87.41
Number of days of payables	days	64.98	62.85	64.97	55.55	52.11	43.55	44.09	36.47	42.35	41.71	42.70	47.03	49.23	53.64	48.51	46.84	53.13	40.45	40.80	37.27
Cash conversion cycle	days	200.62	181.60	174.45	188.61	152.41	159.49	155.85	159.75	142.16	154.68	153.79	153.34	160.12	171.61	172.24	173.92	141.86	164.61	161.61	147.63

December 31, 2023 calculation

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

The cash conversion cycle for Lilly(Eli) & Co has exhibited fluctuations over the past eight quarters. In Q4 2023, the cash conversion cycle was 284.84 days, indicating that it took the company approximately 284.84 days to convert its investments in inventory and other resources into cash from sales. This represented an increase from the previous quarter's cycle of 249.51 days.

Looking at the trend over the past year, the company's cash conversion cycle has shown periods of both increase and decrease, with Q3 and Q4 of 2022 experiencing shorter cycles compared to Q1 and Q2 of 2023.

Overall, a longer cash conversion cycle can suggest inefficiencies in managing inventory, collection of receivables, and payment of payables, potentially tying up liquidity and impacting the company's working capital. It is important for Lilly(Eli) & Co to monitor and manage its cash conversion cycle effectively to improve cash flow and operational efficiency.