MKS Instruments Inc (MKSI)

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	72.49	128.97	100.44	105.08	108.32
Days of sales outstanding (DSO)	days	67.51	77.82	55.25	62.30	66.84
Number of days of payables	days	23.92	56.24	29.24	23.18	20.72
Cash conversion cycle	days	116.08	150.56	126.44	144.20	154.44

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 72.49 + 67.51 – 23.92
= 116.08

The cash conversion cycle of MKS Instruments Inc has varied over the past five years. In 2023, the company's cash conversion cycle decreased to 116.08 days, indicating an improvement in its efficiency in managing its working capital. This reduction suggests that MKS Instruments is able to generate cash more quickly through its operational activities.

Comparing to the prior year, there was a significant decrease in the cash conversion cycle from 150.56 days in 2022 to 116.08 days in 2023. This improvement may be attributed to better inventory management, faster collection of receivables, or more efficient payment of payables.

Looking further back, in 2021, the cash conversion cycle was lower at 126.44 days, suggesting that the company was managing its working capital effectively. However, in 2020 and 2019, the cash conversion cycle increased to 144.20 days and 154.44 days, respectively, indicating a potential delay in the company's cash inflows and outflows.

Overall, the decreasing trend in the cash conversion cycle from 2019 to 2023 reflects improved efficiency in MKS Instruments' working capital management, which is a positive indicator of the company's operational effectiveness. Efficient management of the cash conversion cycle can help the company maintain liquidity, optimize cash flow, and enhance overall financial performance.