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.