Martin Marietta Materials Inc (MLM)

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	67.53	60.54	59.89	66.90	63.94
Days of sales outstanding (DSO)	days	42.60	49.03	54.53	45.77	46.73
Number of days of payables	days	23.45	26.68	28.34	19.61	21.25
Cash conversion cycle	days	86.67	82.89	86.07	93.06	89.42

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 67.53 + 42.60 – 23.45
= 86.67

The cash conversion cycle of Martin Marietta Materials, Inc. has exhibited fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 90.11 days from 84.21 days in 2022, indicating a longer time required to convert its resource inputs into cash inflows. This rise may suggest potential inefficiencies in managing its working capital components.

In comparison to 2021, where the cash conversion cycle stood at 87.77 days, the recent increase could be a cause for concern, as it indicates a slower conversion of inventory and receivables into cash compared to the prior year. However, the cycle in 2023 is lower than that of 2020, which was 96.99 days, illustrating an improvement in managing working capital efficiency for the company.

Despite the slight increase in 2023, Martin Marietta Materials, Inc. has maintained a relatively stable cash conversion cycle over the past five years. It is imperative for the company to monitor its working capital closely and implement strategies to streamline its processes to enhance efficiency and maintain a healthy cash conversion cycle in the future.