ResMed Inc (RMD)

Cash conversion cycle

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Days of inventory on hand (DOH)	days	161.91	147.84	195.08	174.75	122.87
Days of sales outstanding (DSO)	days	66.63	65.23	60.93	58.75	70.14
Number of days of payables	days	48.55	42.74	29.47	37.41	37.10
Cash conversion cycle	days	180.00	170.33	226.54	196.09	155.90

June 30, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 161.91 + 66.63 – 48.55
= 180.00

The cash conversion cycle (CCC) of ResMed Inc over the specified periods demonstrates notable fluctuations, reflecting underlying changes in operational efficiency related to inventory management, receivables collection, and payables settlement.

In fiscal year ending June 30, 2021, the CCC stood at 155.90 days, indicating that on average, the company took approximately 156 days to convert its investments in inventory and receivables into cash, after accounting for payables period. This relatively moderate cycle suggests an operational profile that balances inventory levels with receivables collection efforts.

By June 30, 2022, the CCC increased substantially to 196.09 days, representing a roughly 40-day elongation from the prior year. Such an increase may be attributable to extended inventory turnover times, lengthened receivables collection periods, or shorter periods of payables, which collectively suggest a slowdown in cash inflows or a buildup in working capital requirements.

The following year, June 30, 2023, indicates a further rise to 226.54 days, the highest observed within this period. This significant expansion implies a substantial deterioration in the company's operational efficiency, potentially driven by factors such as increased inventory holding, slower customer payments, or changes unfavorable to payables management. The prolonged CCC suggests that ResMed Inc required over 226 days to convert its investments into cash, which might impact liquidity and operational flexibility.

However, in the subsequent year ending June 30, 2024, a notable improvement occurred, with the CCC decreasing to 170.33 days. This reduction of approximately 56 days from the previous year indicates a positive trend towards operational efficiency, possibly due to better inventory turnover, improved receivables collection, or adjustments in payables policy to accelerate cash inflows.

The subsequent year, June 30, 2025, saw a slight increase to 180.00 days. This minor uptick suggests some marginal elongation in the cycle but remains significantly lower than the peak observed in 2023, reflecting ongoing efforts to optimize working capital management.

Overall, the trend in ResMed Inc's cash conversion cycle reveals periods of considerable fluctuation, with an initial rise leading to a peak in 2023, followed by a phase of contraction and stabilization. This evolution indicates dynamic operational strategies aimed at enhancing liquidity and managing working capital more efficiently, although the cyclical variations underscore persistent challenges or seasonal factors influencing cash flow cycles.