Perrigo Company PLC (PRGO)

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	143.60	139.61	139.97	139.01	140.04	142.62	140.13	133.54	134.26	132.44	136.78	142.40	141.44	136.77	119.05	122.87	115.76	106.29	115.22	121.55
Days of sales outstanding (DSO)	days	59.83	62.49	57.99	57.86	59.44	—	57.16	—	—	—	57.58	—	—	—	—	—	—	—	—	—
Number of days of payables	days	60.66	56.49	58.60	52.37	56.44	60.91	65.45	56.78	60.98	62.13	55.13	52.87	51.01	51.80	50.75	59.88	54.72	63.47	61.96	64.41
Cash conversion cycle	days	142.78	145.61	139.35	144.50	143.05	81.72	131.83	76.76	73.27	70.32	139.23	89.53	90.44	84.97	68.30	62.99	61.04	42.82	53.26	57.14

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 143.60 + 59.83 – 60.66
= 142.78

The cash conversion cycle measures how efficiently a company manages its working capital, including how quickly it can convert its inventory into cash. Perrigo Company PLC's cash conversion cycle fluctuated over the past few quarters, ranging from a high of 145.61 days to a low of 42.82 days.

A longer cash conversion cycle indicates that Perrigo is taking longer to sell its inventory and collect payments, tying up more of its cash in the process. On the other hand, a shorter cycle suggests a faster turnover of inventory and better management of accounts receivable and accounts payable.

The trend in Perrigo's cash conversion cycle shows some variability, with substantial increases and decreases over the quarters. This could be indicative of changes in the company's sales patterns, inventory management practices, or payment terms with customers and suppliers.

Overall, the company should aim to optimize its cash conversion cycle by improving inventory turnover, accelerating accounts receivable collection, and effectively managing accounts payable. This will help Perrigo enhance its liquidity position and generate more cash flow from its operations.