Roivant Sciences Ltd (ROIV)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	18.72	2.97	2.91	2.54	1.68	35.60	48.32	—	—
Days of sales outstanding (DSO)	days	217.11	172.21	279.86	305.26	332.86	458.60	250.41	—	29.34
Number of days of payables	days	28.26	19.97	26.20	30.03	22.98	28.54	26.90	69.98	16.29
Cash conversion cycle	days	207.57	155.21	256.58	277.77	311.56	465.66	271.83	-69.98	13.05

March 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 18.72 + 217.11 – 28.26
= 207.57

The cash conversion cycle of Roivant Sciences Ltd has exhibited significant fluctuations over the past few quarters. The company's cash conversion cycle was notably long at 465.66 days in December 2022 but decreased substantially to -69.98 days in June 2022, indicating a negative cycle where the company was able to convert inventory into cash before having to pay suppliers.

However, the cycle lengthened again to 311.56 days by March 2023, indicating a potential issue with managing inventory, accounts receivable, and accounts payable efficiently. The cycle further increased to 277.77 days in June 2023 and 256.58 days in September 2023, suggesting continued challenges in managing cash flow effectively.

There was a significant improvement in the cash conversion cycle in December 2023, which decreased to 155.21 days, indicating a more efficient conversion of inventory and receivables into cash while managing payables. By March 2024, the cycle had increased to 207.57 days, demonstrating a slight lengthening of the cycle compared to the previous quarter but still indicating room for improvement in managing working capital effectively.

Overall, Roivant Sciences Ltd should focus on optimizing its cash conversion cycle to ensure a healthy balance between managing inventory, accounts receivable, and accounts payable, thereby enhancing overall liquidity and financial performance.