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.