Masimo Corporation (MASI)

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	78.12	115.75	111.89	170.66	196.69
Days of sales outstanding (DSO)	days	3.51	68.26	3.36	59.85	45.84
Number of days of payables	days	43.01	53.41	61.82	64.06	58.35
Cash conversion cycle	days	38.62	130.59	53.43	166.44	184.18

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 78.12 + 3.51 – 43.01
= 38.62

Over the past five years, Masimo Corporation's cash conversion cycle has shown fluctuations. In 2020, the company's cash conversion cycle was relatively high at 184.18 days, indicating that it took Masimo a significant amount of time to convert its investments in raw materials into cash from sales.

However, in subsequent years, Masimo managed to improve its cash conversion cycle significantly. By the end of 2021, the cycle decreased to 166.44 days, showing a positive trend in efficiently managing its working capital. This trend continued in 2022, with the cycle further declining to 53.43 days, signifying that Masimo was quicker in converting its inventory and receivables into cash.

In 2023, there was a slight increase in the cash conversion cycle to 130.59 days, potentially indicating some challenges in managing working capital efficiency. Nonetheless, in the most recent year, 2024, Masimo achieved a notable reduction in its cycle to 38.62 days, suggesting improved efficiency in cash management and a more streamlined production and sales process.

Overall, Masimo Corporation's cash conversion cycle has experienced fluctuations but generally displayed a positive trajectory towards shorter cycles, indicating better management of inventory, receivables, and payables over the years. This trend reflects potential improvements in operational efficiency and liquidity management within the company's business operations.