ADMA Biologics Inc (ADMA)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	372.83	501.60	570.70	485.56	490.30
Days of sales outstanding (DSO)	days	38.76	36.73	128.86	114.44	43.15
Number of days of payables	days	33.77	40.64	56.87	65.95	84.77
Cash conversion cycle	days	377.83	497.69	642.69	534.05	448.68

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 372.83 + 38.76 – 33.77
= 377.83

The cash conversion cycle of ADMA Biologics Inc has shown fluctuating trends over the past five years. It decreased from 448.68 days in 2019 to 377.83 days in 2023, indicating an improvement in the company's efficiency in managing its working capital. This decrease suggests that the company has been able to shorten the time it takes to convert its investments in inventory and accounts receivable into cash.

However, the cash conversion cycle increased significantly in 2021 to 642.69 days before decreasing in the subsequent years. This fluctuation could be attributed to changes in the company's operations, sales cycles, or inventory management practices.

Overall, a lower cash conversion cycle is generally preferred as it implies that the company is able to generate cash more quickly from its operations. ADMA Biologics Inc should continue to monitor and manage its cash conversion cycle to ensure efficient working capital management and sustained financial health.