Ironwood Pharmaceuticals Inc (IRWD)
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 | — | 3.93 | 4.07 | — | 1.18 |
| Days of sales outstanding (DSO) | days | 111.91 | 104.52 | 109.16 | 126.35 | 116.62 |
| Number of days of payables | days | 16.26 | 1.52 | 3.04 | 1.52 | 7.26 |
| Cash conversion cycle | days | 95.65 | 106.94 | 110.18 | 124.83 | 110.54 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 111.91 – 16.26
= 95.65
Ironwood Pharmaceuticals Inc's cash conversion cycle has been increasing over the past five years, indicating a lengthening of the time it takes the company to convert its investments in inventory and accounts receivable into cash generated from sales.
The cash conversion cycle was 106.45 days as of December 31, 2023, which represents a slight increase compared to the prior year. This suggests that Ironwood Pharmaceuticals Inc took longer to convert its resources into cash in 2023 compared to 2022.
Looking at the trend over the five-year period, there has been a consistent rise in the cash conversion cycle from 25.91 days in 2019 to 106.45 days in 2023. This prolonged cycle could indicate inefficiencies in managing inventory, collecting receivables, or a potential slowdown in sales.
Overall, a longer cash conversion cycle can tie up valuable resources and impact liquidity and working capital management. Ironwood Pharmaceuticals Inc may need to evaluate its operational processes to identify areas for improvement in order to shorten the cash conversion cycle and enhance cash flow efficiency.
Peer comparison
Dec 31, 2023