McKesson Corporation (MCK)
Cash conversion cycle
| 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 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 25.21 | 26.93 | 27.87 | 26.72 | 26.33 | 27.73 | 26.77 | 26.57 | 25.87 | 26.54 | 27.05 | 28.88 | 28.78 | 28.78 | 28.97 | 26.45 | 26.67 | 29.17 | 28.42 | 29.48 |
| Days of sales outstanding (DSO) | days | 25.56 | 27.96 | 28.24 | 28.11 | 25.62 | 27.37 | 26.98 | 27.09 | 25.72 | 26.10 | 29.32 | 30.06 | 29.39 | 29.00 | 30.06 | 28.07 | 31.51 | 30.55 | 31.21 | 32.37 |
| Number of days of payables | days | 56.26 | 57.11 | 59.42 | 57.29 | 56.82 | 56.69 | 55.22 | 54.09 | 52.68 | 51.88 | 54.44 | 55.38 | 58.28 | 54.69 | 56.96 | 52.89 | 59.28 | 56.11 | 56.58 | 60.40 |
| Cash conversion cycle | days | -5.50 | -2.22 | -3.31 | -2.46 | -4.87 | -1.60 | -1.47 | -0.43 | -1.09 | 0.76 | 1.93 | 3.56 | -0.11 | 3.08 | 2.06 | 1.63 | -1.10 | 3.61 | 3.05 | 1.45 |
March 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 25.21 + 25.56 – 56.26
= -5.50
The cash conversion cycle of McKesson Corporation has shown fluctuations over the past several quarters. Generally speaking, a negative cash conversion cycle indicates that the company is able to convert its investments in inventory back into cash quickly, which is considered favorable.
Looking at the trend, the cash conversion cycle has been generally decreasing from the positive range to negative values, with some variations. This signifies an improvement in the efficiency of the company's working capital management.
For the most recent quarter (ending March 31, 2024), the cash conversion cycle was at -5.50 days, indicating that McKesson Corporation was able to convert its investments in inventory into cash and then into sales within a relatively short period. This suggests effective management in terms of inventory turnover, accounts receivable collection, and accounts payable payment.
However, it's also worth noting that there were certain periods in the past where the cash conversion cycle was positive, indicating a longer period to convert inventory to sales and receivables into cash. The positive values seen in the past may warrant further investigation to understand potential factors impacting the efficiency of the company's working capital management during those periods.
In conclusion, the overall trend of a decreasing cash conversion cycle for McKesson Corporation reflects improved efficiency in managing its working capital, but it's important to monitor for any potential fluctuations or changes in the future.
Peer comparison
Mar 31, 2024