Walgreens Boots Alliance Inc (WBA)
Cash conversion cycle
| Aug 31, 2024 | Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 18.26 | 20.12 | 22.66 | 22.87 | 20.37 |
| Days of sales outstanding (DSO) | days | 14.30 | 13.98 | 13.77 | 15.67 | 18.73 |
| Number of days of payables | days | 30.91 | 30.78 | 30.53 | 31.21 | 26.10 |
| Cash conversion cycle | days | 1.65 | 3.32 | 5.90 | 7.32 | 13.00 |
August 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 18.26 + 14.30 – 30.91
= 1.65
The cash conversion cycle of Walgreens Boots Alliance Inc has shown a decreasing trend over the past five years, indicating an improvement in its efficiency in managing cash flows related to its operations.
In particular, the company's cash conversion cycle has decreased from 13.00 days in 2020 to 1.65 days in 2024, reflecting a significant enhancement in converting its resources into cash. This reduction suggests that Walgreens Boots Alliance has been able to streamline its operations, manage its working capital more effectively, and generate cash at a faster rate.
The declining trend in the cash conversion cycle implies that the company has been able to shorten the time taken to convert its inventory into sales and subsequently collect cash from customers. This improvement can be attributed to better inventory management practices, efficient accounts receivable collection processes, and effective payables management.
Overall, the decreasing cash conversion cycle of Walgreens Boots Alliance Inc over the years reflects a positive development in the company's operational efficiency and liquidity management, which is beneficial for its financial health and sustainability in the long run.
Peer comparison
Aug 31, 2024