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.