Globus Medical (GMED)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 232.38 | 564.73 | 413.79 | 361.61 | 384.62 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 232.38 | 564.73 | 413.79 | 361.61 | 384.62 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 232.38 + — – —
= 232.38
The cash conversion cycle for Globus Medical has shown fluctuating trends over the years. In 2020, the cycle was 384.62 days, indicating the number of days it takes for the company to convert its investment in inventory into cash flows from sales. Subsequently, in 2021, the cycle improved slightly to 361.61 days, suggesting better management of inventory, receivables, and payables.
However, in 2022, there was a notable increase in the cash conversion cycle to 413.79 days, possibly implying a delay in collecting receivables or an increase in the holding period of inventory. The trend worsened further in 2023, with the cycle extending significantly to 564.73 days, which may raise concerns about the effectiveness of working capital management during that period.
Fortunately, in 2024, Globus Medical managed to reduce the cash conversion cycle substantially to 232.38 days, reflecting a positive turnaround in managing cash flows and optimizing the conversion of resources into revenue. Overall, monitoring and effectively managing the cash conversion cycle is crucial for maintaining liquidity and operational efficiency within the company.
Peer comparison
Dec 31, 2024