McKesson Corporation (MCK)
Cash conversion cycle
| Mar 31, 2025 | Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 24.28 | 26.03 | 27.19 | 27.21 | 31.07 |
| Days of sales outstanding (DSO) | days | 26.07 | 25.54 | 25.60 | 25.70 | 29.39 |
| Number of days of payables | days | 58.41 | 58.00 | 58.67 | 55.42 | 62.92 |
| Cash conversion cycle | days | -8.06 | -6.42 | -5.88 | -2.51 | -2.46 |
March 31, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 24.28 + 26.07 – 58.41
= -8.06
The cash conversion cycle for McKesson Corporation has shown a decreasing trend over the past five years, indicating an improvement in the company's efficiency in managing its working capital. The cycle decreased from -2.46 days as of March 31, 2021, to -8.06 days as of March 31, 2025.
A negative cash conversion cycle typically suggests that the company is able to collect cash from customers before paying its suppliers, which can be advantageous as it allows the company to operate with less need for external financing.
Overall, the consistent decrease in the cash conversion cycle indicates that McKesson Corporation has been effective in optimizing its cash flow and working capital management, potentially leading to improved liquidity and financial performance.
Peer comparison
Mar 31, 2025