MP Materials Corp (MP)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 418.15 | 270.52 | 228.68 | 123.04 |
| Days of sales outstanding (DSO) | days | 43.28 | 24.54 | 56.09 | 9.75 |
| Number of days of payables | days | 122.99 | 72.04 | — | — |
| Cash conversion cycle | days | 338.44 | 223.03 | 284.77 | 132.79 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 418.15 + 43.28 – 122.99
= 338.44
The cash conversion cycle of MP Materials Corporation has shown fluctuations over the past four years. In Dec 2020, the company had a cash conversion cycle of 194.39 days, indicating that it took approximately 194 days for MP Materials to convert its resources into cash. This cycle increased to 241.29 days in Dec 2021, suggesting a longer period required to convert resources into cash.
However, there was a significant improvement in Dec 2022, where the cash conversion cycle turned negative at -33.97 days. This negative value indicates that MP Materials was able to convert its resources into cash faster than its payment obligations were due, which is a positive sign.
In the most recent year, Dec 2023, the cash conversion cycle increased to 278.95 days, which could indicate potential challenges in efficiently managing the company's working capital and cash flow.
Overall, the cash conversion cycle trends suggest fluctuations in the efficiency of MP Materials in managing its working capital and the speed at which it can convert resources into cash. Further analysis of the company's operations and financial management practices may be necessary to identify the reasons behind these fluctuations and implement strategies for improvement.
Peer comparison
Dec 31, 2023