MP Materials Corp (MP)
Cash conversion cycle
| 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 | 570.37 | 358.31 | 322.34 | 295.64 | 270.52 | 300.70 | 213.32 | 207.56 | 174.78 | 79.83 | 90.23 | 100.21 | 104.68 | |||
| Days of sales outstanding (DSO) | days | 43.28 | 21.49 | 15.14 | 18.62 | 24.38 | 13.63 | 26.56 | 30.91 | 56.09 | 49.23 | 13.80 | 29.47 | 9.89 | |||
| Number of days of payables | days | 167.76 | — | — | — | 72.04 | — | — | — | — | — | — | — | — | |||
| Cash conversion cycle | days | 445.89 | 379.80 | 337.48 | 314.26 | 222.86 | 314.33 | 239.88 | 238.46 | 230.87 | 129.06 | 104.03 | 129.67 | 114.57 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 570.37 + 43.28 – 167.76
= 445.89
The cash conversion cycle for MP Materials Corporation has fluctuated over the past eight quarters, with Q3 2023 and Q1 2023 showing the longest cycles at 321.41 days and 260.23 days, respectively. These extended cycles indicate that the company takes a relatively long time to convert its investments in inventory back into cash.
On the other hand, the shortest cycle was in Q4 2022 at -33.97 days, which may suggest that the company was able to quickly convert its inventory into sales and collect cash during that period, potentially indicating efficiency or changes in business operations.
Overall, monitoring and managing the cash conversion cycle is crucial for MP Materials Corporation to optimize its working capital and ensure efficient operations in converting inventory into cash flow.
Peer comparison
Dec 31, 2023