Omnicell Inc (OMCL)
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 | 35.16 | 42.72 | 44.07 | 43.60 | 51.27 |
| Days of sales outstanding (DSO) | days | 77.43 | 81.43 | 76.85 | 74.98 | 84.34 |
| Number of days of payables | days | 14.38 | 18.35 | 26.28 | 18.25 | 22.02 |
| Cash conversion cycle | days | 98.21 | 105.80 | 94.64 | 100.33 | 113.59 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 35.16 + 77.43 – 14.38
= 98.21
Omnicell Inc.'s cash conversion cycle, a measure of how efficiently the company manages its working capital, has shown fluctuations over the past five years.
In 2019, the company had a relatively long cash conversion cycle of 137.74 days, indicating that it took a significant amount of time to convert its investments in inventory and accounts receivable into cash. However, over the following years, Omnicell managed to improve its efficiency significantly, with the cycle decreasing to 120.45 days in 2020, 108.28 days in 2021, and further to 127.80 days in 2022. This trend suggests that the company was becoming more adept at managing its inventory, collecting receivables, and paying off its liabilities in a streamlined manner.
However, in 2023, there was a slight increase in the cash conversion cycle to 116.72 days, indicating a potential slowdown in the efficiency of Omnicell's working capital management compared to the previous year. This increase may warrant further investigation into the reasons behind the lengthening cycle and whether it is a temporary blip or a concerning trend.
Overall, while Omnicell has made strides in managing its cash conversion cycle more effectively over the past few years, the recent uptick in 2023 highlights the importance of continual monitoring and optimization of working capital processes to ensure sustained efficiency and financial health.
Peer comparison
Dec 31, 2023