Solventum Corp. (SOLV)

Cash conversion cycle

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Days of inventory on hand (DOH) days 96.21 89.27 92.76 91.36
Days of sales outstanding (DSO) days
Number of days of payables days
Cash conversion cycle days 96.21 89.27 92.76 91.36 0.00

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 96.21 + — – —
= 96.21

Solventum Corp.'s cash conversion cycle has seen fluctuations over the years. From an optimal figure of 0.00 days on December 31, 2020, the company's cash conversion cycle increased significantly to 91.36 days by December 31, 2021. This suggests that it took Solventum Corp. approximately three months to convert its resources into cash during that period.

Subsequently, there was a slight increase in the cash conversion cycle to 92.76 days by December 31, 2022, and a slight improvement to 89.27 days by December 31, 2023. However, by December 31, 2024, the cash conversion cycle had extended to 96.21 days, indicating a longer period for the company to convert its investments into cash.

The overall trend shows an inconsistency in managing the company's working capital efficiency, as evidenced by the fluctuations in the cash conversion cycle. Solventum Corp. should focus on optimizing its operational processes to shorten the cash conversion cycle and improve cash flow management for better financial performance in the future.