Zimmer Biomet Holdings Inc (ZBH)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	133.37	148.20	130.61	115.63	128.08
Days of sales outstanding (DSO)	days	72.70	73.41	74.37	68.75	78.09
Number of days of payables	days	11.61	25.51	21.54	16.50	17.25
Cash conversion cycle	days	194.46	196.10	183.44	167.87	188.93

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 133.37 + 72.70 – 11.61
= 194.46

The cash conversion cycle of Zimmer Biomet Holdings Inc has shown varying trends over the past five years. In 2020, the company's cash conversion cycle was 188.93 days, indicating that it took nearly six months to convert its investments in inventory and accounts receivable into cash.

Subsequently, there was a noticeable improvement in efficiency as the cash conversion cycle decreased to 167.87 days by the end of 2021. This reduction suggests that Zimmer Biomet was able to streamline its operations and manage its working capital more effectively, leading to a quicker conversion of assets into cash.

However, in 2022, the cash conversion cycle increased to 183.44 days before further rising to 196.10 days by the end of 2023. These increases may signal challenges in managing inventory levels, collecting receivables, or optimizing the payment of liabilities.

In the most recent period, the cash conversion cycle remained high at 194.46 days as of December 31, 2024. This suggests that Zimmer Biomet may still be facing some difficulties in converting its resources into cash efficiently, which could impact its liquidity and working capital management.

Overall, Zimmer Biomet Holdings Inc should closely monitor and address the factors influencing its cash conversion cycle to enhance operational efficiency and maintain healthy cash flow levels in the future.