Globus Medical (GMED)
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 | 564.73 | 413.79 | 361.61 | 384.62 | 398.14 |
| Days of sales outstanding (DSO) | days | 117.49 | 77.55 | 63.11 | 68.51 | 75.49 |
| Number of days of payables | days | 37.73 | 49.96 | 33.50 | 30.56 | 49.92 |
| Cash conversion cycle | days | 644.48 | 441.38 | 391.22 | 422.57 | 423.70 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 564.73 + 117.49 – 37.73
= 644.48
The cash conversion cycle of Globus Medical Inc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 644.10 days from 439.93 days in 2022, indicating that Globus Medical Inc took longer to convert its investments in inventory and other resources into cash during the year. This increase may be a cause for concern as it suggests a potential slowdown in the company's efficiency in managing its working capital.
Comparing to the previous years, Globus Medical Inc's cash conversion cycle was shorter in 2022 compared to 2021, indicating improved efficiency in managing its working capital during that period. However, in 2021, the cash conversion cycle increased from the previous year, potentially signaling a less efficient management of inventory, accounts receivable, and accounts payable during that time.
In 2020 and 2019, the cash conversion cycle remained relatively stable at around 420 days, suggesting a consistent performance in converting investments into cash during these years.
Overall, the increasing trend in the cash conversion cycle from 2022 to 2023 raises a red flag regarding the company's working capital management. Globus Medical Inc may benefit from implementing strategies to shorten its cash conversion cycle and improve its liquidity position.
Peer comparison
Dec 31, 2023