McKesson Corporation (MCK)
Cash conversion cycle
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 25.21 | 26.33 | 25.87 | 28.78 | 26.63 |
| Days of sales outstanding (DSO) | days | 25.56 | 25.62 | 25.73 | 29.41 | 31.55 |
| Number of days of payables | days | 56.26 | 56.82 | 52.68 | 58.28 | 59.18 |
| Cash conversion cycle | days | -5.49 | -4.87 | -1.08 | -0.09 | -1.01 |
March 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 25.21 + 25.56 – 56.26
= -5.49
The cash conversion cycle for McKesson Corporation has shown variability in recent years. In the fiscal year ending March 31, 2024, the company's cash conversion cycle improved to -5.49 days, indicating a shorter time frame in converting its investments in inventory and other resources into cash from sales. This could suggest more efficient management of working capital and faster turnover of assets.
Compared to the previous year, where the cash conversion cycle was -4.87 days, the improvement in 2024 reflects a positive trend. In contrast, in the fiscal years ending March 31, 2022, and March 31, 2020, the company had negative cash conversion cycles of -1.08 days and -1.01 days, respectively, suggesting a quick conversion of investments into cash, albeit to a lesser extent than in 2024.
Overall, McKesson Corporation has demonstrated a generally efficient cash conversion cycle in recent years, with the most significant improvement observed in 2024. This trend indicates effective working capital management, potentially leading to improved liquidity and operational efficiency for the company.
Peer comparison
Mar 31, 2024