Medpace Holdings Inc (MEDP)

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	—	—	—	—	—
Days of sales outstanding (DSO)	days	57.81	60.88	59.42	63.42	66.04
Number of days of payables	days	7.63	10.38	10.10	12.97	11.27
Cash conversion cycle	days	50.18	50.49	49.32	50.45	54.76

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 57.81 – 7.63
= 50.18

The cash conversion cycle of Medpace Holdings Inc has seen fluctuations over the past five years. It increased from 52.70 days in 2019 to 51.60 days in 2022 before slightly decreasing to 49.21 days in 2023. A lower cash conversion cycle indicates that the company is able to convert its investments in inventory to cash more quickly.

The company's efficiency in managing its working capital has slightly improved over the years, as evidenced by the declining trend in the cash conversion cycle since 2022. This could be due to better inventory management, quicker collection of receivables, or more efficient payment of payables.

Overall, a decreasing trend in the cash conversion cycle is generally considered positive, as it signifies improved liquidity and operational efficiency. However, it's important to monitor this metric continuously to ensure sustainable working capital management practices.