Medpace Holdings Inc (MEDP)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	51.32	54.95	54.19	51.96	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
Number of days of payables	days	7.26	5.85	6.16	5.63	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
Cash conversion cycle	days	44.05	49.10	48.03	46.34	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

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 51.32 – 7.26
= 44.05

The cash conversion cycle (CCC) is a key indicator of a company's efficiency in managing its working capital. It measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Analyzing Medpace Holdings Inc's CCC over the past few years, we observe fluctuations in the metric. The company's CCC ranged from 44.05 days to 58.00 days during the period from December 31, 2022, to March 31, 2022. A lower CCC generally indicates that the company is efficiently managing its working capital and converting assets into cash quickly, which is a positive sign for liquidity.

For Medpace Holdings Inc, it is essential to closely monitor these fluctuations and strive to keep its CCC at a reasonable level to ensure a healthy cash flow and efficient operations. A prolonged CCC may indicate potential issues in managing inventory or collecting receivables, which can lead to liquidity problems and operational inefficiencies in the long run.

Overall, maintaining a balance in the CCC is crucial for Medpace Holdings Inc to sustain its operations, meet financial obligations, and achieve long-term growth and profitability.