Vertex Pharmaceuticals Inc (VRTX)

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 110.37 80.98 71.75 65.79 48.68
Days of sales outstanding (DSO) days 58.21 59.39 55.33 52.67 56.32
Number of days of payables days 54.51 53.43 39.63 36.34 25.46
Cash conversion cycle days 114.07 86.94 87.46 82.12 79.54

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 110.37 + 58.21 – 54.51
= 114.07

The cash conversion cycle of Vertex Pharmaceuticals, Inc. has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 165.94 days, indicating that it took longer for Vertex Pharmaceuticals to convert its investments in inventory and other resources into cash receipts from sales. This longer cash conversion cycle may suggest potential challenges in managing working capital efficiently.

Comparing this to previous years, Vertex Pharmaceuticals had a lower cash conversion cycle in 2022 at 111.89 days, which was an improvement from the prior year. However, in 2021, the cash conversion cycle increased to 118.60 days, and in 2020, it was slightly higher at 114.36 days. The best performance in terms of the cash conversion cycle was seen in 2019, with only 108.78 days needed to convert resources into cash.

Overall, the trend of the cash conversion cycle for Vertex Pharmaceuticals has been increasing over the years, possibly indicating challenges in managing inventory levels, accounts receivable, and accounts payable efficiently. It is important for the company to focus on optimizing its working capital management strategies to potentially reduce the cash conversion cycle and improve overall liquidity and financial performance.


Peer comparison

Dec 31, 2023


See also:

Vertex Pharmaceuticals Inc Cash Conversion Cycle