West Pharmaceutical Services Inc (WST)
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 | 75.68 | 78.57 | 82.46 | 82.87 | 77.29 | 74.01 | 74.65 | 76.70 | 71.00 | 69.55 | 70.71 | 66.85 | 72.42 | 72.23 | 73.57 | 72.60 | 69.71 | 69.73 | 71.02 | 69.50 |
| Days of sales outstanding (DSO) | days | 63.75 | 64.93 | 68.15 | 64.96 | 64.13 | 60.84 | 65.85 | 63.15 | 63.00 | 64.86 | 69.55 | 73.25 | 65.67 | 67.06 | 64.04 | 64.38 | 63.34 | 64.39 | 68.32 | 66.55 |
| Number of days of payables | days | 42.20 | 39.99 | 40.00 | 43.34 | 40.14 | 33.84 | 39.90 | 45.71 | 43.57 | 40.83 | 42.01 | 44.03 | 48.03 | 44.16 | 43.45 | 45.67 | 46.37 | 43.97 | 46.50 | 42.33 |
| Cash conversion cycle | days | 97.23 | 103.50 | 110.61 | 104.49 | 101.28 | 101.01 | 100.60 | 94.14 | 90.43 | 93.58 | 98.25 | 96.07 | 90.06 | 95.13 | 94.16 | 91.31 | 86.68 | 90.15 | 92.83 | 93.72 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 75.68 + 63.75 – 42.20
= 97.23
The cash conversion cycle of West Pharmaceutical Services, Inc. has shown some fluctuation over the past eight quarters. The company's cash conversion cycle, which represents the time it takes for the company to convert its investments in inventory and other resources into cash receipts from customers, ranged from 99.48 days to 115.69 days during this period.
In the latest quarter, Q4 2023, the cash conversion cycle stood at 101.91 days, a slight improvement from the previous quarter (Q3 2023) where it was 107.41 days. This indicates that the company was able to manage its working capital more efficiently in Q4 2023, leading to a faster conversion of inventory and other assets into cash.
However, compared to Q1 and Q2 of 2023, where the cash conversion cycle was 109.19 days and 115.69 days respectively, Q4 2023 still represents an improvement. This suggests that West Pharmaceutical Services, Inc. may have implemented better inventory management practices or improved its accounts receivable collection processes in the later quarters of 2023.
Overall, the company's cash conversion cycle has shown some variability, but the recent trend indicates a potential focus on improving working capital efficiency, which can have positive implications for the company's liquidity and financial performance. Continual monitoring of the cash conversion cycle will be important to ensure sustainable financial health and operational effectiveness for West Pharmaceutical Services, Inc.
Peer comparison
Dec 31, 2023