Zimmer Biomet Holdings Inc (ZBH)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	133.37	143.66	145.14	147.37	148.20	137.97	136.57	135.55	130.61	126.06	120.56	116.95	115.63	137.59	139.03	144.37	128.08	140.78	140.95	131.57
Days of sales outstanding (DSO)	days	72.70	73.34	71.00	73.18	73.41	69.37	71.36	72.69	74.37	68.35	66.27	62.79	68.81	65.85	67.13	72.77	77.51	71.11	56.80	49.93
Number of days of payables	days	11.61	19.55	20.93	22.85	25.51	18.99	21.28	24.02	21.54	19.77	17.44	17.66	16.50	17.90	19.79	18.96	17.25	18.91	20.52	21.63
Cash conversion cycle	days	194.46	197.45	195.20	197.70	196.10	188.35	186.65	184.23	183.44	174.63	169.40	162.09	167.94	185.53	186.37	198.18	188.35	192.98	177.24	159.87

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 measures the efficiency of a company's management of its operating capital in converting its resources into cash. A shorter cash conversion cycle indicates that a company's operational efficiency is improving, as it takes less time to convert raw materials into finished products, sell them, and collect cash from customers.

Analyzing the cash conversion cycle of Zimmer Biomet Holdings Inc from March 31, 2020, to December 31, 2024, reveals fluctuations in the efficiency of its working capital management. The cycle ranged from a low of 159.87 days on March 31, 2020, to a peak of 197.70 days on March 31, 2024. Overall, the cycle trended upward during the period, with some periods showing slight improvements but generally increasing.

The company's cash conversion cycle remained relatively stable around the 180-day mark, indicating that Zimmer Biomet was taking approximately 6 months to convert its resources into cash during most quarters analyzed. This may suggest that the company's operating efficiency might have room for improvement, as a shorter cash conversion cycle typically signifies better management of working capital and faster cash flows.

Investors and stakeholders in Zimmer Biomet Holdings Inc should closely monitor the trends in the cash conversion cycle to assess the company's ability to efficiently manage its working capital and convert assets into cash. A decreasing trend in the cycle would be indicative of improved operational efficiency and potentially better financial performance in the future.