Neogen Corporation (NEOG)

Cash conversion cycle

		Nov 30, 2024	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
Days of inventory on hand (DOH)	days	52.77	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
Days of sales outstanding (DSO)	days	33.41	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
Number of days of payables	days	21.18	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
Cash conversion cycle	days	65.00	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

November 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 52.77 + 33.41 – 21.18
= 65.00

Neogen Corporation's cash conversion cycle, a measure of the efficiency of its working capital management, has shown fluctuations over the years.

From November 30, 2019, to May 31, 2020, the cash conversion cycle increased slightly from 114.07 days to 115.95 days, indicating a potential delay in converting products into cash. However, there was a further increase to 116.41 days by August 31, 2020.

The trend reversed by November 30, 2020, with the cycle decreasing to 112.18 days before increasing to 122.27 days by February 28, 2021, the highest point in recent years. This rise may suggest challenges in managing receivables and inventory efficiently.

Subsequently, improvements were seen with a decrease to 106.81 days by November 30, 2021, and a more substantial drop to 103.58 days by May 31, 2022. The cycle increased slightly to 109.17 days by August 31, 2022, before dropping to 75.76 days by November 30, 2022, and a further drop to 60.24 days by May 31, 2023.

The cycle continued to decline significantly to 47.95 days by August 31, 2023, indicating an enhanced ability to convert inventory and receivables into cash quickly. However, there was a slight increase to 49.78 days by November 30, 2023, before rising to 71.11 days by February 29, 2024.

Lastly, by August 31, 2024, the cash conversion cycle increased to 89.67 days, and then decreased again to 65.00 days by November 30, 2024, demonstrating fluctuations in the company's working capital management over the period analyzed.