OSI Systems Inc (OSIS)

Cash conversion cycle

		Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Days of inventory on hand (DOH)	days	111.74	130.67	141.17	138.80	112.68	130.69	127.98	131.00	120.50	124.15	121.40	116.58	108.14	109.02	100.59	93.94	86.48	84.08	87.57	92.99
Days of sales outstanding (DSO)	days	153.75	125.61	99.24	92.05	109.22	91.38	99.12	97.83	95.24	87.91	90.03	91.32	94.75	86.82	87.59	82.09	88.41	79.93	79.12	75.48
Number of days of payables	days	53.67	50.79	51.82	54.49	46.34	44.73	45.80	52.27	45.18	46.76	46.55	51.09	51.92	47.19	34.02	34.06	30.45	36.17	36.87	34.93
Cash conversion cycle	days	211.81	205.49	188.58	176.35	175.56	177.34	181.29	176.57	170.55	165.30	164.88	156.80	150.97	148.65	154.16	141.97	144.44	127.84	129.81	133.55

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 111.74 + 153.75 – 53.67
= 211.81

The cash conversion cycle of OSI Systems Inc has exhibited fluctuations over the past several quarters. The trend shows a general upward movement in the cash conversion cycle over the latest four quarters, indicating a potential deterioration in the company's efficiency in managing its working capital.

From a high of 211.81 days at June 30, 2024, the cash conversion cycle has increased steadily from the previous quarter. This suggests that OSI Systems Inc is taking longer to convert its investments in inventory and accounts receivable into cash, which could potentially impact the company's liquidity and cash flow.

Furthermore, the increasing trend in the cash conversion cycle may indicate inefficiencies in the company's operations, such as slower inventory turnover or longer collection periods for accounts receivables. This trend warrants further investigation into OSI Systems Inc's working capital management practices to address potential inefficiencies and improve overall financial performance.

It is essential for the company to closely monitor and manage its cash conversion cycle to ensure optimal utilization of resources and maintain a healthy level of liquidity to support its operational and growth requirements.