Envista Holdings Corp (NVST)
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 | 83.89 | 100.33 | 88.96 | 90.17 | 108.42 |
| Days of sales outstanding (DSO) | days | 57.95 | 55.91 | 48.29 | 68.30 | 70.87 |
| Number of days of payables | days | 58.19 | 76.15 | 62.65 | 98.15 | 81.15 |
| Cash conversion cycle | days | 83.66 | 80.09 | 74.59 | 60.33 | 98.14 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 83.89 + 57.95 – 58.19
= 83.66
The cash conversion cycle for Envista Holdings Corp has exhibited fluctuations over the past five years, ranging from a low of 68.07 days in 2020 to a high of 83.66 days in 2023. The trend shows a general upward trajectory over the period, indicating potential challenges in managing the company's working capital effectively.
A longer cash conversion cycle suggests that Envista Holdings Corp takes a relatively extended period to convert its investment in inventory into cash receipts from sales. This could be indicative of inefficiencies in inventory management, collection policies, or payment terms with suppliers and customers.
The increase in the cash conversion cycle from 2020 to 2023 may raise concerns regarding the company's liquidity position and operational efficiency. It is essential for management to focus on optimizing inventory levels, streamlining accounts receivable collection, and managing accounts payables effectively to reduce the cash conversion cycle and enhance cash flow generation.
Overall, monitoring and potentially improving the cash conversion cycle can positively impact Envista Holdings Corp's financial health by ensuring better utilization of resources and maintaining adequate liquidity levels for sustainable operations.
Peer comparison
Dec 31, 2023