Merck & Company Inc (MRK)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 78.61 | 68.80 | 84.84 | 68.00 | 78.32 |
| Days of sales outstanding (DSO) | days | 62.84 | 58.18 | 69.17 | 69.02 | 63.24 |
| Number of days of payables | days | 48.49 | 49.63 | 65.69 | 52.98 | 48.97 |
| Cash conversion cycle | days | 92.95 | 77.35 | 88.33 | 84.04 | 92.59 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 78.61 + 62.84 – 48.49
= 92.95
The cash conversion cycle for Merck & Co Inc has fluctuated over the past five years. It increased from 110.75 days in 2019 to 117.97 days in 2023, with a peak in 2023. This indicates that the company took longer to convert its investments in inventory and accounts receivable into cash in 2023 compared to previous years.
In 2022, the cash conversion cycle decreased to 92.71 days, showing a significant improvement in efficiency compared to the prior year. However, this improvement was not sustained as the cycle increased to 105.17 days in 2021 and 100.16 days in 2020.
Overall, the fluctuation in the cash conversion cycle suggests that Merck & Co Inc may have experienced changes in its inventory management and accounts receivable collection processes during the period under review. Further analysis would be required to understand the specific factors driving these fluctuations and to evaluate the effectiveness of the company's working capital management strategies.
Peer comparison
Dec 31, 2023