ICU Medical Inc (ICUI)

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	170.42	160.56	128.44	142.00	155.15
Days of sales outstanding (DSO)	days	26.10	35.49	29.36	35.64	58.29
Number of days of payables	days	36.04	49.81	35.90	32.40	59.10
Cash conversion cycle	days	160.48	146.25	121.90	145.23	154.33

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 170.42 + 26.10 – 36.04
= 160.48

The cash conversion cycle of ICU Medical, Inc. has shown varying trends over the past five years. In 2023, the company's cash conversion cycle increased to 160.93 days from 146.82 days in 2022, indicating that the company took longer to convert its investments in inventory into cash during the year. This may be a cause for concern as it suggests inefficiencies in managing inventory, collecting receivables, or paying suppliers.

Compared to 2021, when the cash conversion cycle was 123.05 days, the increase in 2023 is quite significant, reflecting potential challenges in working capital management. It is important for the company to focus on improving its inventory turnover, accounts receivable collection, and accounts payable management to shorten the cash conversion cycle and enhance its liquidity position.

In 2020 and 2019, the cash conversion cycle was higher at 146.29 days and 155.61 days, respectively, indicating that ICU Medical, Inc. has made progress in managing its cash conversion cycle more efficiently in 2023 compared to those earlier years. However, there is still room for improvement to optimize working capital and cash flow management in the future.