Intuitive Surgical Inc (ISRG)

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	101.75	85.93	66.03	79.45	83.93
Days of sales outstanding (DSO)	days	54.16	52.51	47.85	51.83	51.38
Number of days of payables	days	15.73	14.14	13.63	10.78	17.41
Cash conversion cycle	days	140.18	124.30	100.25	120.50	117.90

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 101.75 + 54.16 – 15.73
= 140.18

Intuitive Surgical Inc's cash conversion cycle has fluctuated over the past five years. The cycle increased from 178.49 days in 2019 to 180.80 days in 2020 before decreasing to 147.12 days in 2021. However, there was an increase again in 2022 to 189.69 days and a further increase to 215.19 days in 2023.

A longer cash conversion cycle indicates that the company takes a longer time to convert its investments in inventory and accounts receivable into cash from sales. This may be due to various factors such as slower collection of receivables, longer inventory turnover, or delayed payment of accounts payable.

Intuitive Surgical Inc should regularly monitor and analyze its cash conversion cycle to identify potential inefficiencies in its working capital management. By improving the cycle, the company can optimize its cash flow, reduce liquidity risks, and enhance overall operational efficiency.