MP Materials Corp (MP)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 202.06 | 369.78 | 274.36 | 308.19 | 325.08 | 206.62 | 202.98 | 197.05 | 189.98 | 217.36 | 142.95 | 137.75 | 123.01 | 98.72 | 106.05 | 110.27 | 127.56 | 151.19 | 154.32 | 167.83 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 202.06 | 369.78 | 274.36 | 308.19 | 325.08 | 206.62 | 202.98 | 197.05 | 189.98 | 217.36 | 142.95 | 137.75 | 123.01 | 98.72 | 106.05 | 110.27 | 127.56 | 151.19 | 154.32 | 167.83 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 202.06 + — – —
= 202.06
The cash conversion cycle of MP Materials Corp has exhibited fluctuations over the periods provided. It measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
From March 31, 2020, to December 31, 2022, the cash conversion cycle showed a decreasing trend, indicating improved efficiency in managing inventory, receivables, and payables, resulting in quicker cash conversion. However, from September 30, 2022, to December 31, 2024, there was a notable increase in the cash conversion cycle, suggesting potential challenges in managing working capital effectively during these periods.
Specifically, the cycle decreased from 167.83 days on March 31, 2020, to 98.72 days on September 30, 2021, reflecting an improvement in cash flow performance. However, there was a sharp increase to 369.78 days on September 30, 2024.
The increase in the cash conversion cycle in recent periods may indicate issues such as longer inventory holding periods, slower accounts receivable collections, or extended payment terms to suppliers, which can tie up cash and impact the company's liquidity and working capital management.
MP Materials Corp should monitor and analyze the components of the cash conversion cycle to identify areas for improvement and maintain a balance between efficient resource utilization and cash flow generation.
Peer comparison
Dec 31, 2024