Option Care Health Inc (OPCH)
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 | 25.24 | 22.26 | 20.77 | 20.06 | 18.52 |
| Days of sales outstanding (DSO) | days | 40.08 | 44.94 | 45.47 | 51.03 | 62.24 |
| Number of days of payables | days | 39.29 | 37.60 | 31.68 | 35.79 | 35.34 |
| Cash conversion cycle | days | 26.03 | 29.60 | 34.56 | 35.31 | 45.42 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 25.24 + 40.08 – 39.29
= 26.03
Option Care Health Inc.'s cash conversion cycle has shown a decreasing trend over the past five years, indicating an improvement in the efficiency of its cash management. In 2023, the company's cash conversion cycle was 15.28 days, compared to 16.61 days in 2022, 22.70 days in 2021, 20.21 days in 2020, and 29.89 days in 2019.
A lower cash conversion cycle typically suggests that Option Care Health Inc. takes less time to convert its investments in inventory and other resources into cash from sales, thus improving its liquidity position. This efficiency can be attributed to effective inventory management, faster collection of receivables, and/or extended payment terms with suppliers.
Overall, the downward trend in Option Care Health Inc.'s cash conversion cycle reflects positive working capital management, enhancing the company's ability to meet its short-term obligations and potentially invest in growth opportunities.
Peer comparison
Dec 31, 2023