McKesson Corporation (MCK)
Cash conversion cycle
| Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 24.27 | 26.24 | 27.80 | 31.00 | 26.05 | 27.79 | 28.73 | 27.55 | 27.19 | 28.86 | 27.99 | 27.88 | 27.21 | 28.47 | 29.64 | 31.39 | 31.07 | 31.10 | 30.29 | 27.67 |
| Days of sales outstanding (DSO) | days | 26.07 | 27.36 | 27.93 | 27.62 | 25.54 | 27.92 | 28.20 | 28.09 | 25.60 | 27.37 | 26.98 | 27.06 | 25.70 | 26.07 | 29.29 | 30.06 | 29.39 | 29.00 | 30.06 | 28.07 |
| Number of days of payables | days | 58.38 | 54.69 | 61.32 | 62.67 | 58.03 | 58.94 | 61.27 | 59.09 | 58.67 | 59.00 | 57.75 | 56.76 | 55.42 | 55.65 | 59.65 | 60.20 | 62.92 | 59.11 | 59.57 | 55.33 |
| Cash conversion cycle | days | -8.04 | -1.09 | -5.58 | -4.06 | -6.44 | -3.22 | -4.33 | -3.44 | -5.88 | -2.78 | -2.77 | -1.82 | -2.51 | -1.11 | -0.72 | 1.25 | -2.46 | 0.99 | 0.77 | 0.41 |
March 31, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 24.27 + 26.07 – 58.38
= -8.04
McKesson Corporation has shown a fluctuating trend in its cash conversion cycle over the periods provided. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
The company’s cash conversion cycle started at 0.41 days on June 30, 2020, indicating a quick conversion of resources into cash. It then increased to 0.77 days by September 30, 2020, and further to 0.99 days by December 31, 2020, which may suggest a slightly slower conversion process.
However, starting from March 31, 2021, the cash conversion cycle turned negative, indicating that McKesson Corporation was able to convert its resources into cash at a faster pace than before. This negative trend continued over the subsequent periods, reaching the lowest at -8.04 days on March 31, 2025.
A negative cash conversion cycle is generally considered favorable as it implies that the company is receiving cash from sales before needing to pay its suppliers. This can be an indicator of efficient working capital management and strong liquidity position.
McKesson Corporation's improving cash conversion cycle portrays effective management of its working capital and efficient operations in turning investments into cash, potentially enhancing its financial health and flexibility.
Peer comparison
Mar 31, 2025