Zoetis Inc (ZTS)

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	159.32	187.55	181.53	152.98	145.57
Days of sales outstanding (DSO)	days	55.01	58.18	58.09	55.39	58.02
Number of days of payables	days	29.92	30.06	31.35	34.69	40.86
Cash conversion cycle	days	184.41	215.67	208.27	173.69	162.72

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 159.32 + 55.01 – 29.92
= 184.41

The cash conversion cycle of Zoetis Inc has shown a fluctuating trend over the past five years. In December 2020, the cycle stood at 162.72 days, indicating that it took the company approximately 162.72 days to convert its investments in raw materials into cash from sales.

By December 2021, the cash conversion cycle had increased to 173.69 days, possibly suggesting a delay in collecting cash from customers or a lengthening of the time taken to sell inventory. This trend continued as the cycle extended to 208.27 days by the end of 2022 and further to 215.67 days by the end of 2023.

However, there was a slight improvement in the cash conversion cycle by December 2024, when it decreased to 184.41 days. This reduction may indicate enhanced efficiency in managing the company's inventory, receivables, and payables.

Overall, Zoetis Inc's cash conversion cycle has experienced fluctuations over the years, potentially signaling changes in the company's working capital management and operational efficiency. Further analysis of the underlying factors contributing to these changes would provide more insight into the company's financial performance.