Medtronic PLC (MDT)

Cash conversion cycle

		Jan 31, 2025	Oct 31, 2024	Jul 31, 2024	Apr 30, 2024	Apr 26, 2024	Jan 31, 2024	Jan 26, 2024	Oct 31, 2023	Oct 27, 2023	Jul 31, 2023	Jul 28, 2023	Apr 30, 2023	Apr 28, 2023	Jan 31, 2023	Jan 27, 2023	Oct 31, 2022	Oct 28, 2022	Jul 31, 2022	Jul 29, 2022	Apr 30, 2022
Days of inventory on hand (DOH)	days	166.21	122.95	122.72	101.14	104.64	119.87	120.94	122.73	121.18	117.19	116.79	108.59	111.37	117.93	116.31	111.02	108.00	97.83	100.41	97.15
Days of sales outstanding (DSO)	days	—	—	—	—	66.42	—	69.39	—	68.49	—	63.75	—	67.82	—	71.72	—	68.40	—	62.70	—
Number of days of payables	days	—	—	—	—	48.34	—	42.07	—	45.78	—	46.13	—	56.01	—	47.80	—	46.96	—	45.52	—
Cash conversion cycle	days	166.21	122.95	122.72	101.14	122.72	119.87	148.26	122.73	143.88	117.19	134.40	108.59	123.18	117.93	140.24	111.02	129.44	97.83	117.60	97.15

January 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 166.21 + — – —
= 166.21

The cash conversion cycle of Medtronic PLC has shown fluctuations over the period from April 30, 2022, to January 31, 2025.

The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally preferred as it indicates efficient management of working capital.

In the data provided, we observed that the cash conversion cycle varied between a low of 97.15 days in April 30, 2022, and a high of 166.21 days in January 31, 2025. The cycle has experienced fluctuations throughout the period, with some periods indicating improved efficiency in converting resources to cash, while others showing longer cycles.

The longer cash conversion cycles observed in certain periods may suggest factors such as slower inventory turnover, extended accounts receivable collection periods, or delayed payment of accounts payable. These factors can tie up cash and impact the company's liquidity and cash flow.

It is important for Medtronic PLC to closely monitor and manage its cash conversion cycle to ensure optimal working capital management, efficient operations, and healthy cash flows. Analyzing the reasons behind the fluctuations and implementing strategies to streamline the conversion cycle can help improve the company's financial performance and liquidity position.