Merit Medical Systems Inc (MMSI)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 94.44 | 100.48 | 94.71 | 82.15 | 75.07 |
| Days of sales outstanding (DSO) | days | 55.73 | 55.61 | 56.73 | 58.08 | 59.20 |
| Number of days of payables | days | 21.14 | 21.81 | 24.39 | 20.59 | 18.89 |
| Cash conversion cycle | days | 129.03 | 134.28 | 127.04 | 119.64 | 115.37 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 94.44 + 55.73 – 21.14
= 129.03
Based on the provided data, Merit Medical Systems Inc's cash conversion cycle has been showing an increasing trend over the past five years. In December 31, 2020, the cash conversion cycle was 115.37 days, which increased to 119.64 days by December 31, 2021. Subsequently, the cash conversion cycle continued to rise to 127.04 days by December 31, 2022, further increasing to 134.28 days by December 31, 2023. However, there was a slight decrease in the cash conversion cycle to 129.03 days by December 31, 2024.
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A longer cash conversion cycle indicates that the company is taking more time to generate cash from its operations, which can potentially strain its liquidity and working capital management.
In the case of Merit Medical Systems Inc, the increasing trend in the cash conversion cycle suggests that the company may be facing challenges in efficiently managing its working capital components such as inventory, accounts receivable, and accounts payable. It is essential for the company to closely monitor and improve its cash conversion cycle to enhance its cash flow generation and overall financial performance.
Peer comparison
Dec 31, 2024