Stryker Corporation (SYK)

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	213.67	237.59	212.22	197.00	240.90
Days of sales outstanding (DSO)	days	64.41	67.04	70.53	64.47	68.70
Number of days of payables	days	75.15	74.42	75.06	67.11	55.85
Cash conversion cycle	days	202.93	230.21	207.69	194.36	253.75

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 213.67 + 64.41 – 75.15
= 202.93

Stryker Corporation's cash conversion cycle, a key indicator of the efficiency of its working capital management, has shown fluctuating trends over the past five years. In 2020, the cash conversion cycle stood at 253.75 days, indicating a longer period required to convert resources into cash. However, there was a noticeable improvement in 2021, with the cycle decreasing to 194.36 days, suggesting a more efficient handling of cash flows and working capital.

Despite the positive change in 2021, the trend was not sustained in 2022 as the cash conversion cycle increased to 207.69 days. This suggests a slowdown in the company's ability to convert investments in inventory and receivables into cash within a given period. Subsequently, by 2023, the cash conversion cycle further extended to 230.21 days, indicating potential challenges in managing working capital effectively.

In a positive turn of events, by the end of 2024, Stryker Corporation managed to reduce its cash conversion cycle to 202.93 days, showcasing an improved efficiency in converting resources into cash compared to the previous years. Overall, the company's cash conversion cycle has demonstrated fluctuations, reflecting varying levels of effectiveness in managing working capital and cash flows over the analyzed period.