Monolithic Power Systems Inc (MPWR)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	175.07	218.97	181.28	151.46	165.26
Days of sales outstanding (DSO)	days	46.07	38.95	33.31	29.72	32.08
Number of days of payables	days	28.73	30.09	58.02	36.81	35.35
Cash conversion cycle	days	192.42	227.83	156.57	144.37	162.00

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 175.07 + 46.07 – 28.73
= 192.42

The cash conversion cycle for Monolithic Power System Inc has shown varying trends over the past five years. In 2023, the cash conversion cycle decreased to 182.40 days from 227.83 days in 2022, indicating an improvement in the company's efficiency in converting its resources into cash. This reduction may suggest better management of inventory, accounts receivable, and accounts payable.

Compared to 2021, where the cash conversion cycle was 156.58 days, the company took longer to convert its resources into cash in 2023. However, it was more efficient in cash conversion in 2023 compared to 2020 and 2019 when the cash conversion cycle was 144.37 days and 162.00 days, respectively.

The fluctuation in the cash conversion cycle over the years may be influenced by changes in the company's operational efficiency, working capital management, and overall business strategy. Further analysis of the components of the cash conversion cycle, such as Days Sales Outstanding (DSO), Days Inventory Outstanding (DIO), and Days Payables Outstanding (DPO), could provide insights into the specific areas driving these fluctuations.