Mattel Inc (MAT)
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 | 40.38 | 64.91 | 57.19 | 43.71 | 37.96 |
| Days of sales outstanding (DSO) | days | 74.45 | 60.04 | 76.99 | 86.43 | 79.42 |
| Number of days of payables | days | 31.24 | 34.23 | 42.62 | 40.97 | 35.19 |
| Cash conversion cycle | days | 83.58 | 90.72 | 91.56 | 89.17 | 82.19 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 40.38 + 74.45 – 31.24
= 83.58
The cash conversion cycle measures how long it takes for a company to convert its investments in inventory into cash received from sales. A shorter cash conversion cycle is generally favorable as it indicates efficient management of working capital.
Over the past five years, Mattel Inc's cash conversion cycle has shown some fluctuations. In 2023, the cash conversion cycle decreased to 83.58 days from 90.72 days in 2022. This decline suggests improved efficiency in managing inventory and collecting receivables, resulting in a quicker conversion of these assets into cash.
Comparing the 2023 figure to the data from previous years, Mattel Inc's cash conversion cycle was relatively high in 2021 and 2022 at 91.56 days and 90.72 days, respectively. The decrease in 2023 indicates a positive trend towards a more efficient working capital management strategy.
In 2020 and 2019, the company experienced a lower cash conversion cycle of 89.17 days and 82.19 days, respectively, showcasing stronger operational efficiency during those years.
Overall, while there have been fluctuations, Mattel Inc's management of its cash conversion cycle in 2023 appears to have improved compared to the previous year, signaling potentially better working capital management. Monitoring this metric in conjunction with other financial ratios can provide a comprehensive view of the company's financial health and operational effectiveness.