Monolithic Power Systems Inc (MPWR)

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	155.30	170.10	184.01	177.76	175.07	183.73	199.39	201.85	218.97	208.42	208.79	199.95	181.28	156.95	139.77	153.17	151.46	154.83	180.03	166.57
Days of sales outstanding (DSO)	days	38.45	29.48	30.42	38.82	46.07	37.86	34.30	36.71	38.95	35.19	32.29	34.81	33.31	27.75	28.29	33.71	29.72	45.09	30.78	32.30
Number of days of payables	days	37.94	46.38	43.07	46.45	28.73	29.92	32.94	27.17	30.09	41.26	45.24	46.01	58.02	54.38	46.41	50.03	36.81	50.33	53.46	47.82
Cash conversion cycle	days	155.80	153.19	171.36	170.13	192.42	191.66	200.74	211.39	227.83	202.35	195.84	188.76	156.57	130.31	121.65	136.85	144.37	149.59	157.36	151.05

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 155.30 + 38.45 – 37.94
= 155.80

The cash conversion cycle of Monolithic Power Systems Inc has shown fluctuations over the past few years, indicating changes in the efficiency of its working capital management.

From March 31, 2020, to June 30, 2021, the company managed to decrease its cash conversion cycle from 151.05 days to 121.65 days, indicating an improvement in managing its cash, inventory, and receivables. This trend suggests that the company was able to collect cash from customers, convert inventory into sales, and pay off its obligations more efficiently during this period.

However, from September 30, 2021, to March 31, 2024, the cash conversion cycle increased steadily, reaching a peak of 227.83 days on December 31, 2022, before slightly declining to 155.80 days on December 31, 2024. This rise in the cash conversion cycle could indicate challenges in collecting receivables timely, managing inventory effectively, or facing liquidity constraints.

Overall, the company's cash conversion cycle has experienced fluctuations, highlighting the importance of monitoring working capital management closely to ensure efficient operations and sustainable financial performance.