Monolithic Power Systems Inc (MPWR)

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	Dec 31, 2019	Sep 30, 2019	Mar 31, 2019	Dec 31, 2018
Days of inventory on hand (DOH)	days	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	164.61	177.52	196.03	191.67
Days of sales outstanding (DSO)	days	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	31.96	35.56	37.35	35.77
Number of days of payables	days	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	35.21	39.68	37.49	31.87
Cash conversion cycle	days	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	161.36	173.40	195.89	195.57

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 some fluctuations over the past eight quarters. The trend indicates a gradual increase in the cash conversion cycle from Q1 2022 to Q1 2023, suggesting a lengthening period for the company to convert its investments in inventory and other resources into cash inflows from sales.

The company's cash conversion cycle peaked at 227.83 days in Q4 2022 before slightly improving to 182.40 days in Q4 2023. This improvement indicates that the company has been able to manage its working capital more efficiently in the most recent quarter.

Overall, a higher number of days in the cash conversion cycle indicates a longer time for the company to generate cash from its operating activities, which can potentially strain liquidity. Monolithic Power System Inc should focus on optimizing its inventory management, accounts receivable collection, and accounts payable processes to shorten the cash conversion cycle and improve its overall financial health.