OSI Systems Inc (OSIS)

Cash conversion cycle

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Days of inventory on hand (DOH)	days	111.12	112.10	119.98	107.35	85.92
Days of sales outstanding (DSO)	days	154.26	108.56	92.84	94.52	88.33
Number of days of payables	days	53.37	46.10	44.99	51.55	30.26
Cash conversion cycle	days	212.00	174.56	167.83	150.33	144.00

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 111.12 + 154.26 – 53.37
= 212.00

OSI Systems Inc's cash conversion cycle has shown a gradual increase over the past five years, indicating a lengthening time period for the company to convert its investments in inventory and accounts receivable into cash. The trend reveals a potential inefficiency in managing the company's working capital.

In the most recent fiscal year ending June 30, 2024, OSI Systems Inc's cash conversion cycle stood at 212.00 days, marking a significant increase from the previous year's figure of 174.56 days. This suggests that the company took longer to convert its resources into cash during this period.

Comparing the current cash conversion cycle to that of five years ago, there has been a noteworthy increase from 144.00 days in June 2020 to 212.00 days in June 2024. This consistent upward trend may require further investigation into the company's operational efficiency and working capital management practices.

Overall, a rising cash conversion cycle can impact a company's liquidity and financial health, as it signifies a longer operating cycle and potentially ties up capital that could otherwise be used for growth or investment. It is crucial for OSI Systems Inc to closely monitor and address factors contributing to this trend to optimize its working capital management and enhance overall financial performance.