Merck & Company Inc (MRK)

Cash conversion cycle

		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	Mar 31, 2020
Days of inventory on hand (DOH)	days	79.28	79.36	82.05	81.55	78.64	76.17	74.39	73.36	70.85	69.01	69.33	76.22	81.90	67.65	66.34	76.77	68.08	85.57	80.45	76.08
Days of sales outstanding (DSO)	days	58.46	65.76	68.01	67.56	62.84	63.96	69.04	65.69	58.18	58.69	61.57	66.46	69.17	67.82	65.20	71.81	66.20	84.25	72.86	73.99
Number of days of payables	days	52.93	45.58	44.63	44.02	48.51	43.60	43.18	46.04	51.11	41.44	43.62	49.04	63.41	40.64	47.01	48.37	53.04	52.28	45.80	46.49
Cash conversion cycle	days	84.81	99.54	105.43	105.09	92.97	96.54	100.25	93.00	77.92	86.26	87.28	93.64	87.66	94.82	84.53	100.21	81.24	117.54	107.51	103.58

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 79.28 + 58.46 – 52.93
= 84.81

The cash conversion cycle is an important financial metric that measures how efficient a company is in managing its working capital. For Merck & Company Inc, the cash conversion cycle has shown some fluctuations over the years based on the provided data.

- The cash conversion cycle for Merck & Company Inc ranged from approximately 77.92 days to 117.54 days during the period from December 31, 2022, to September 30, 2020, respectively.

- A lower number of days in the cash conversion cycle indicates that the company is able to convert its investments in inventory into cash quicker. On the other hand, a higher number of days suggests that the company takes longer to collect cash from customers and manage its working capital efficiently.

- In the most recent period, the cash conversion cycle decreased from 105.43 days on June 30, 2024, to 84.81 days on December 31, 2024. This indicates that Merck & Company Inc was able to improve its working capital management during this time.

- Overall, fluctuations in the cash conversion cycle can be influenced by various factors such as changes in sales, inventory management, and payment terms with suppliers and customers. It is essential for the company to monitor and analyze this metric regularly to ensure optimal cash flow efficiency and liquidity management.