Parker-Hannifin Corporation (PH)

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	60.93	64.36	60.55	61.43	58.07
Days of sales outstanding (DSO)	days	3.97	3.39	4.19	4.35	3.71
Number of days of payables	days	43.54	45.39	47.36	49.01	32.87
Cash conversion cycle	days	21.35	22.36	17.38	16.78	28.91

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 60.93 + 3.97 – 43.54
= 21.35

The cash conversion cycle for Parker-Hannifin Corporation has shown variations over the past five years. In Jun 30, 2024, the company's cash conversion cycle stood at 21.35 days, indicating that on average, it takes approximately 21.35 days for the company to convert its investments in inventory back into cash.

Compared to the previous year, the cash conversion cycle has improved, as it was 22.36 days in Jun 30, 2023, suggesting that the company managed its working capital more effectively and reduced the time it takes to convert its assets into cash.

However, in Jun 30, 2022, the cash conversion cycle was 17.38 days, which was lower than the current year but higher than the preceding year. This implies that there was a slight increase in the time taken to convert inventory into cash, which could be a concern if not managed effectively.

In the fiscal year ending in Jun 30, 2021, the cash conversion cycle was 16.78 days, showing further improvement compared to the current year. This indicates that the company had a more efficient cash conversion process during that period.

In contrast, in Jun 30, 2020, the cash conversion cycle was 28.91 days, which was the highest among the years presented. This suggests that the company faced challenges in managing its working capital efficiently, resulting in a longer cash conversion cycle that could potentially strain its liquidity.

Overall, the trend in the cash conversion cycle for Parker-Hannifin Corporation shows fluctuations over the past five years, with some periods demonstrating improved efficiency in converting assets into cash while others indicating potential areas for optimization in working capital management.