STERIS plc (STE)

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	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	79.69	102.40	101.56	97.76	78.84	95.98	89.96	84.96	81.70	89.56	93.00	112.45	65.18	62.03	59.45	59.38	56.22	54.61
Days of sales outstanding (DSO)	days	71.62	70.37	71.28	67.82	71.32	64.17	59.61	58.41	63.61	64.63	72.28	79.64	71.58	66.40	60.83	61.16	70.63	66.77
Number of days of payables	days	29.74	33.12	36.32	33.15	34.46	33.52	32.54	31.36	32.08	31.20	36.12	44.02	32.47	28.36	26.66	28.63	31.86	30.29
Cash conversion cycle	days	121.57	139.65	136.52	132.44	115.71	126.63	117.03	112.01	113.24	122.98	129.16	148.07	104.29	100.07	93.62	91.91	94.99	91.09

March 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 79.69 + 71.62 – 29.74
= 121.57

The cash conversion cycle of STERIS plc has displayed some fluctuations over the past two years. In the most recent period ending March 31, 2024, the company's cash conversion cycle stood at 121.57 days, showing an improvement compared to the previous quarter. This indicates that STERIS has become more efficient in converting its investments in raw materials into cash receipts from customers.

The trend over the past two years reveals a general downward trajectory in the cash conversion cycle, indicating that STERIS has been managing its working capital more effectively. Specifically, the cycle has decreased from 148.07 days in the third quarter of 2021 to the current 121.57 days in the first quarter of 2024. This downward trend suggests that the company is managing its inventory, accounts receivable, and accounts payable more efficiently.

The reduction in the cash conversion cycle signifies that STERIS is able to generate cash flows more rapidly from its operational activities, which is a positive signal of financial health and efficiency. However, it is important for the company to maintain this trend and continue optimizing its working capital management to ensure sustainable growth and profitability in the long term.