Waters Corporation (WAT)

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	90.82	84.41	70.50	68.37	73.29
Days of sales outstanding (DSO)	days	90.17	91.23	81.73	90.62	91.33
Number of days of payables	days	14.90	17.28	19.17	16.23	11.20
Cash conversion cycle	days	166.09	158.36	133.07	142.76	153.41

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 90.82 + 90.17 – 14.90
= 166.09

The cash conversion cycle for Waters Corp. has exhibited various trends over the past five years. In 2023, the cash conversion cycle increased to 218.47 days, representing a significant elongation compared to the previous year. This suggests that on average, it took Waters Corp. 218.47 days to convert its investments in inventory and other resources into cash flows from sales.

While the 2023 figure is higher than in 2022, it is noticeable that the trend has been fluctuating over the past five years. A notable improvement was seen in 2021 when the cash conversion cycle decreased to 162.10 days, which indicates that the company was managing its inventory, accounts receivable, and accounts payable more efficiently.

Comparing the figures, it is evident that Waters Corp. experienced challenges in managing its cash conversion cycle in 2023, leading to a longer time to convert its resources into cash compared to the previous years. This trend may imply inefficiencies in managing inventory levels, collecting receivables, or delaying payment of payables, all of which can impact the company's liquidity and working capital efficiency. Further analysis would be required to identify the specific factors driving these changes and to assess the overall financial health and operational effectiveness of Waters Corp.