United Therapeutics Corporation (UTHR)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	55.39	135.63	86.17	292.07	289.89
Days of sales outstanding (DSO)	days	44.88	42.25	43.51	38.73	38.14
Number of days of payables	days	2.77	5.45	3.49	13.84	30.73
Cash conversion cycle	days	97.50	172.43	126.19	316.96	297.31

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 55.39 + 44.88 – 2.77
= 97.50

United Therapeutics Corp's cash conversion cycle has shown a decreasing trend over the past five years, indicating an improvement in the company's efficiency in managing its working capital. The cash conversion cycle decreased from 297.31 days in 2019 to 194.27 days in 2023.

A shorter cash conversion cycle is generally beneficial as it indicates that the company is able to convert its investments in inventory and accounts receivable into cash more quickly. This suggests that United Therapeutics Corp has been more effective in managing its inventory levels, collecting receivables from customers, and extending payment periods to suppliers.

The decreasing trend in the cash conversion cycle can be a positive signal of operational efficiency and effective working capital management practices within the company. However, it is important for United Therapeutics Corp to continue monitoring and optimizing its cash conversion cycle to maintain its financial health and competitiveness in the industry.