ResMed Inc (RMD)

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	98.42	131.43	116.39	80.13	122.80
Days of sales outstanding (DSO)	days	65.28	61.62	57.60	68.66	58.59
Number of days of payables	days	28.46	19.85	24.92	24.20	39.99
Cash conversion cycle	days	135.25	173.20	149.07	124.59	141.39

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 98.42 + 65.28 – 28.46
= 135.25

The cash conversion cycle of ResMed Inc has fluctuated over the past five years, indicating varying efficiencies in managing its cash flow. In the most recent period ending on June 30, 2024, the company's cash conversion cycle stood at 135.25 days, showing an improvement from the previous year. This indicates that the company is taking less time to convert its investment in inventory and accounts receivable into cash.

On the other hand, in the year ending June 30, 2023, the cash conversion cycle was at its highest at 173.20 days, suggesting challenges in efficiently managing its working capital. The cycle decreased in the subsequent years, reaching a low of 124.59 days in June 30, 2021, before increasing slightly in the following year.

Overall, ResMed Inc's cash conversion cycle trend indicates fluctuations in its working capital management efficiency, with a recent improvement in converting its resources into cash. Further analysis of the company's operating cycle components such as inventory turnover and accounts receivable collection period could provide a more detailed understanding of its cash conversion cycle dynamics.