Zoetis Inc (ZTS)

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	188.53	205.96	205.39	195.71	181.88	178.21	171.20	162.69	154.47	152.22	150.17	148.55	145.86	149.46	149.20	140.99	134.80	140.21	137.02	134.19
Days of sales outstanding (DSO)	days	58.18	54.81	58.69	53.48	58.09	54.20	58.94	56.52	55.39	55.21	57.62	58.56	58.02	56.46	56.65	55.56	65.48	61.13	60.01	59.87
Number of days of payables	days	30.22	29.12	35.28	32.38	31.41	28.86	33.39	31.79	35.02	31.42	30.75	30.23	40.94	32.81	31.55	25.23	28.78	27.67	28.30	23.17
Cash conversion cycle	days	216.49	231.64	228.79	216.82	208.56	203.54	196.76	187.42	174.83	176.01	177.03	176.88	162.93	173.10	174.30	171.33	171.50	173.67	168.73	170.88

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 188.53 + 58.18 – 30.22
= 216.49

The cash conversion cycle measures the time it takes for a company like Zoetis Inc to convert its investments in raw materials and other inputs into cash flows from sales. A longer cash conversion cycle indicates that the company needs to tie up more capital in its operations before generating cash. Looking at Zoetis Inc's data over the past eight quarters, we can see that the cash conversion cycle has fluctuated within a range of 316.56 to 400.72 days.

In Q4 2023, Zoetis Inc's cash conversion cycle was 362.56 days, showing that it took around a year for the company to invest in its operations, generate sales, and convert these sales into cash. This represents a slight improvement from the previous quarter, where the cash conversion cycle was 400.72 days. However, the company's cash conversion cycle remains relatively high compared to some previous quarters, such as Q3 2022 when it was 347.60 days.

Overall, Zoetis Inc's cash conversion cycle has shown some volatility over the past two years, indicating potential challenges in managing working capital efficiently. This metric is essential for assessing how effectively the company manages its inventory, accounts receivables, and accounts payables to optimize cash flow generation. Further analysis and comparison with industry benchmarks could provide more insights into Zoetis Inc's efficiency in converting its investments into cash.