West Pharmaceutical Services Inc (WST)
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 | 72.64 | 86.48 | 83.41 | 85.04 | 69.71 |
| Days of sales outstanding (DSO) | days | 64.03 | 64.15 | 63.03 | 65.51 | 63.34 |
| Number of days of payables | days | 40.50 | 44.91 | 51.19 | 56.40 | 46.37 |
| Cash conversion cycle | days | 96.17 | 105.72 | 95.26 | 94.14 | 86.68 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 72.64 + 64.03 – 40.50
= 96.17
The cash conversion cycle of West Pharmaceutical Services, Inc. has fluctuated over the past five years, ranging from 86.68 days in 2019 to 105.72 days in 2022. In 2023, the company's cash conversion cycle decreased to 101.91 days.
A longer cash conversion cycle indicates that the company takes more time to convert its investments in inventory and other resources into cash from sales. Conversely, a shorter cash conversion cycle suggests more efficient operations in terms of managing inventory, collecting receivables, and paying suppliers.
Overall, West Pharmaceutical Services, Inc. saw a slight improvement in its cash conversion cycle in 2023 compared to the previous year, but there is room for further optimization to enhance working capital management and efficiency in converting resources into cash.
Peer comparison
Dec 31, 2023