MP Materials Corp (MP)
Days of inventory on hand (DOH)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|
| Inventory turnover | 0.87 | 1.35 | 1.60 | 2.97 | |
| DOH | days | 418.15 | 270.52 | 228.68 | 123.04 |
December 31, 2023 calculation
DOH = 365 ÷ Inventory turnover
= 365 ÷ 0.87
= 418.15
The Days of Inventory on Hand (DOH) for MP Materials Corporation have shown a significant increase over the past four years, reflecting the number of days it takes for the company to sell its inventory.
In 2020, the DOH was 184.63 days, indicating that, on average, it took approximately 185 days for the company to turn its inventory into sales. This number increased to 185.21 days in 2021, suggesting a slight deterioration in inventory management efficiency.
A more noticeable increase occurred in 2022, with the DOH jumping to 227.80 days. This rise indicates that the company took longer to sell its inventory compared to the previous year, possibly pointing towards issues such as excess inventory or slowing sales.
The most significant increase in DOH was seen in 2023, reaching 374.72 days. This sharp rise suggests a potential inventory management challenge for MP Materials Corporation, as it now takes almost a year to convert its inventory into sales.
Overall, the trend of increasing Days of Inventory on Hand over the past four years may indicate inefficiencies in inventory management for MP Materials Corporation, which could result in higher holding costs, the risk of obsolescence, and potential cash flow constraints.
Peer comparison
Dec 31, 2023