STERIS plc (STE)

Cash conversion cycle

		Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
Days of inventory on hand (DOH)	days	84.30	78.84	81.70	65.18	56.22
Days of sales outstanding (DSO)	days	71.62	74.69	63.61	71.58	70.63
Number of days of payables	days	31.46	34.46	32.08	32.47	31.86
Cash conversion cycle	days	124.46	119.08	113.24	104.29	94.99

March 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 84.30 + 71.62 – 31.46
= 124.46

The cash conversion cycle of STERIS plc has been steadily increasing over the last five years, indicating a lengthening of the time it takes for the company to convert its investment in inventory and other resources into cash inflows from sales.

In particular:
- In 2024, the cash conversion cycle stood at 124.46 days, up from 119.08 days in 2023, showing a prolonged time to convert resources into cash.
- Compared to 2022 and 2021, the 2023 and 2024 figures indicate a clear trend of increasing cycle duration, highlighting potential inefficiencies in the company's operations.
- The cycle lengthened by about 9 days between 2020 and 2021 before experiencing further elongation in the subsequent years.

Overall, the trend suggests that STERIS plc may be facing challenges in managing its working capital effectively, potentially leading to a higher level of inventory or longer accounts receivable collection periods. This can impact the company's liquidity and profitability if not addressed strategically. Further analysis of the underlying factors contributing to this trend would be beneficial for a more thorough assessment.