Medpace Holdings Inc (MEDP)

Cash conversion cycle

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	57.33	58.83	58.46	58.52	62.13	65.55	63.91	67.46	59.42	62.18	57.29	61.12	63.42	54.61	52.68	55.86	65.99	62.16	69.57	63.74
Number of days of payables	days	7.63	7.39	9.21	10.90	10.38	9.38	10.15	9.46	10.10	10.40	10.35	10.21	12.97	8.13	7.58	8.60	11.66	11.35	13.13	8.31
Cash conversion cycle	days	49.70	51.44	49.25	47.61	51.74	56.17	53.76	58.00	49.32	51.78	46.94	50.90	50.45	46.49	45.10	47.26	54.33	50.81	56.44	55.43

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 57.33 – 7.63
= 49.70

The cash conversion cycle of Medpace Holdings Inc has shown some fluctuation over the past eight quarters. It has ranged from a low of 47.86 days in Q1 2023 to a high of 56.88 days in Q1 2022. Generally, a lower cash conversion cycle is preferred as it indicates that the company is able to efficiently convert its investments in inventory and receivables into cash.

In the past two quarters, the cash conversion cycle has been relatively stable, hovering around the 50-day mark. This indicates that the company is managing its working capital efficiently, with a good balance between the time taken to sell inventory, collect receivables, and pay off payables.

However, the upward trend in the cash conversion cycle from Q2 2022 to Q1 2023 could be a cause for concern as it suggests that the company may be taking longer to convert its investments into cash. This could potentially strain the company's liquidity and cash flow management if not addressed.

Overall, a closer examination of the underlying factors driving the changes in the cash conversion cycle is warranted to identify any areas for improvement and optimize the company's working capital management in the future.