DexCom Inc (DXCM)

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	80.62	74.41	66.27	60.92	54.10	58.95	68.20	74.15	82.41	87.50	84.36	80.07	67.49	60.42	51.69	45.77	40.90	43.71	51.87	56.75
Days of sales outstanding (DSO)	days	100.03	85.13	86.85	79.34	95.03	79.53	85.93	80.20	80.44	87.52	85.74	84.54	85.75	76.97	65.20	70.58	73.24	65.85	66.79	67.40
Number of days of payables	days	39.82	36.18	42.35	44.31	41.96	37.55	44.11	32.52	45.20	52.30	43.83	42.07	46.96	44.44	33.90	35.55	34.93	36.81	42.72	50.69
Cash conversion cycle	days	140.83	123.37	110.77	95.95	107.16	100.93	110.01	121.83	117.64	122.72	126.27	122.54	106.28	92.96	83.00	80.80	79.22	72.75	75.94	73.46

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 80.62 + 100.03 – 39.82
= 140.83

The cash conversion cycle of Dexcom Inc has shown some fluctuations over the past eight quarters. In Q4 2023, the company's cash conversion cycle increased to 177.03 days, reflecting a prolonged time taken to convert resources invested in inventory back into cash. This increase in the cash conversion cycle may indicate challenges in managing inventory levels efficiently or delays in collecting receivables.

However, in Q3 2023, the cash conversion cycle decreased to 160.64 days, suggesting an improvement in the company's ability to manage working capital effectively. This reduction may have been driven by better inventory management practices or faster collection of receivables during the quarter.

Looking back further, in Q2 2023 and Q1 2023, the cash conversion cycle continued to decrease, reaching 134.36 days and 112.69 days, respectively. These improvements indicate a trend towards more efficient working capital management, possibly through tighter control over inventory levels and faster collection of receivables.

Comparing these recent quarters to the same periods in the previous year, it is evident that Dexcom Inc has made progress in shortening its cash conversion cycle. For example, in Q4 2022, the cash conversion cycle was 118.81 days, which was lower than the corresponding quarter in 2023, indicating a significant improvement year over year.

Overall, Dexcom Inc's cash conversion cycle has shown both improvements and fluctuations in recent quarters, highlighting the company's efforts to optimize working capital management but also facing challenges that may impact its cash flow efficiency in certain periods.