Perrigo Company PLC (PRGO)

Cash conversion cycle

Sep 30, 2024 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
Days of inventory on hand (DOH) days 147.40 143.60 139.61 139.97 139.01 140.04 142.62 140.13 133.54 134.26 132.44 136.78 142.40 141.44 136.77 119.05 122.87 115.76 106.29 115.22
Days of sales outstanding (DSO) days 65.31 59.83 62.49 57.99 57.86 59.44 — 57.16 — — — 57.58 — — — — — — — —
Number of days of payables days 59.61 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
Cash conversion cycle days 153.10 142.78 145.61 139.35 144.50 143.05 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

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 147.40 + 65.31 – 59.61
= 153.10

The cash conversion cycle for Perrigo Company PLC has exhibited fluctuating trends over the past few quarters. The cycle measures the time it takes for a company to convert its investment in inventory and other resources into cash flows from sales.

In the most recent quarter ended September 30, 2024, the cash conversion cycle was 153.10 days, indicating that Perrigo took approximately 153 days to convert its resources into cash from sales. This represents an increase from the previous quarter's cycle of 142.78 days, suggesting a potential inefficiency in managing its working capital.

Looking further back, there have been varying cycles observed, including a notable spike in the first quarter of 2023, where the cycle reached 81.72 days, indicating a relatively efficient conversion of resources into cash compared to other periods. In contrast, the fourth quarter of 2020 showed a significantly lower cycle of 42.82 days, reflecting a swift conversion of resources into cash.

Overall, the analysis of Perrigo's cash conversion cycle highlights the company's ability to efficiently manage its working capital and liquidity over time, with fluctuations potentially influenced by factors such as inventory management, sales efficiency, and payment terms. Monitoring and managing the cash conversion cycle can be crucial for optimizing working capital and sustaining healthy cash flows in the long term.