Vertex Pharmaceuticals Inc (VRTX)

Cash conversion cycle

		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	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	110.37	111.06	99.35	92.00	80.98	69.84	69.64	66.05	71.75	73.47	73.70	70.54	68.02	60.86	56.94	51.69	50.18	51.84	48.01	48.13
Days of sales outstanding (DSO)	days	58.21	58.52	60.14	61.78	59.39	58.59	58.78	59.93	55.33	56.83	51.21	56.14	52.57	48.70	54.04	64.77	56.32	45.23	49.67	49.50
Number of days of payables	days	54.51	60.62	59.76	55.57	53.43	22.83	37.50	33.83	39.63	28.17	29.23	30.17	37.57	26.72	26.35	27.82	26.24	29.56	25.86	28.96
Cash conversion cycle	days	114.07	108.97	99.73	98.21	86.94	105.61	90.92	92.15	87.46	102.13	95.69	96.51	83.02	82.84	84.63	88.64	80.25	67.52	71.81	68.66

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 for Vertex Pharmaceuticals, Inc. fluctuated over the past eight quarters, ranging from 111.89 days to 165.94 days. In the most recent quarter, Q4 2023, the cash conversion cycle was 165.94 days, representing the average number of days it takes for the company to convert its investments in inventory and other resources into cash from sales, and then back into cash from the collection of accounts receivable. This suggests that the company is taking longer to convert its investments into cash compared to previous quarters.

The trend shows an overall increase in the cash conversion cycle from Q1 2022 to Q4 2023, indicating potential challenges in managing inventory levels, sales collection, or payment to suppliers. A longer cash conversion cycle may lead to liquidity issues and negatively impact the company's working capital management efficiency. Monitoring and improving the cash conversion cycle can help Vertex Pharmaceuticals optimize its cash flow and enhance overall financial performance.