Neogen Corporation (NEOG)

Cash conversion cycle

		Aug 31, 2024	Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019	Aug 31, 2019
Days of inventory on hand (DOH)	days	80.09	71.36	64.00	54.87	58.81	72.60	79.80	97.60	96.34	92.75	91.83	92.34	94.75	98.02	94.88	101.76	100.59	93.93	91.79	93.16
Days of sales outstanding (DSO)	days	34.37	34.86	30.50	28.26	35.13	38.13	42.44	31.99	34.51	37.64	44.32	43.60	48.38	47.21	38.52	38.16	42.50	40.46	43.07	39.98
Number of days of payables	days	24.79	35.11	44.73	35.18	33.70	30.53	46.48	20.42	27.26	19.26	29.35	20.27	22.49	22.97	21.22	23.50	27.14	19.99	20.79	19.49
Cash conversion cycle	days	89.67	71.11	49.78	47.95	60.24	80.20	75.76	109.17	103.58	111.13	106.81	115.67	120.64	122.27	112.18	116.41	115.95	114.40	114.07	113.65

August 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 80.09 + 34.37 – 24.79
= 89.67

The cash conversion cycle of Neogen Corporation has shown fluctuations over the past few periods. The cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle indicates more efficiency in managing working capital.

From the data provided, we can observe that the cash conversion cycle has ranged from a low of 47.95 days to a high of 122.27 days over the period presented. In recent periods, the cash conversion cycle has been relatively high, indicating that the company is taking longer to convert its investments into cash. This could be due to factors such as slower inventory turnover or longer accounts receivable collection periods.

It is important for Neogen Corporation to closely monitor and manage its cash conversion cycle to ensure optimal working capital management and liquidity. Analyzing the components of the cash conversion cycle, including days inventory outstanding, days sales outstanding, and days payables outstanding, can help identify areas for improvement and efficiency in the company's operations.