ADMA Biologics Inc (ADMA)

Cash conversion cycle

		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	Dec 31, 2019
Days of inventory on hand (DOH)	days	320.75	368.83	377.96	372.83	366.93	390.87	447.43	501.60	561.61	562.76	580.84	570.70	548.03	538.57	552.18	485.56	472.60	409.36	406.70	490.30
Days of sales outstanding (DSO)	days	47.81	33.28	63.93	38.76	48.79	64.42	53.21	36.73	58.47	62.62	99.52	128.86	108.64	147.89	116.65	114.44	57.38	63.83	72.03	43.15
Number of days of payables	days	29.91	29.08	36.55	33.77	24.41	29.20	35.35	40.64	86.86	43.87	58.92	56.87	82.99	33.31	71.28	65.95	54.07	50.51	71.18	84.77
Cash conversion cycle	days	338.65	373.03	405.34	377.83	391.31	426.10	465.29	497.69	533.21	581.50	621.44	642.69	573.67	653.14	597.55	534.05	475.91	422.68	407.54	448.68

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 320.75 + 47.81 – 29.91
= 338.65

The cash conversion cycle of ADMA Biologics Inc has shown fluctuations over the periods presented in the table. The trend indicates that the company takes an average of around 450 days to convert its resources invested in inventory back into cash. This time frame includes the period the company holds inventory, the time it takes to sell the inventory, and collecting the cash from customers.

The cash conversion cycle has displayed a gradual increase over recent periods, reaching a peak of 642.69 days in March 2022 before declining slightly. This indicates potential inefficiencies in managing the company's inventory, sales, and collection processes. A longer cash conversion cycle suggests that ADMA Biologics Inc may be tying up its cash resources for extended periods, impacting its liquidity and possibly leading to increased financing needs.

It would be advisable for the company to focus on optimizing its inventory management, sales processes, and accounts receivable collection to shorten the cash conversion cycle. By streamlining these operations, ADMA Biologics Inc could improve its cash flow, enhance liquidity, and reduce its reliance on external financing sources.