Thermo Fisher Scientific Inc (TMO)
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 | 73.35 | 73.42 | 80.91 | 97.15 | 93.59 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 73.35 | 73.42 | 80.91 | 97.15 | 93.59 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 73.35 + — – —
= 73.35
The cash conversion cycle of Thermo Fisher Scientific Inc has shown a fluctuating trend over the past five years. Starting at 93.59 days in 2020, it increased to 97.15 days in 2021, before dropping to 80.91 days in 2022. This downward trend continued as the cycle further decreased to 73.42 days in 2023 and remained relatively stable at 73.35 days in 2024.
A lower cash conversion cycle is generally considered favorable as it indicates the company is able to efficiently convert its investments in inventory and receivables into cash. Thermo Fisher's downward trend in its cash conversion cycle suggests an improvement in its efficiency in managing working capital and generating cash flows. This can be attributed to better inventory management, quicker collection of receivables, and potentially extending payment terms to suppliers.
Overall, the decreasing trend in Thermo Fisher's cash conversion cycle reflects positively on the company's cash flow management and operational efficiency over the years, contributing to its financial strength and stability.
Peer comparison
Dec 31, 2024