Materion Corporation (MTRN)
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 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 107.24 | 109.68 | 108.23 | 100.01 | 95.91 | 96.09 | 135.93 | 213.39 | 752.35 | 1,384.99 | 925.25 | 696.83 | 532.64 | 679.99 | 744.36 | 845.78 | 1,212.49 | — | — | — |
| Days of sales outstanding (DSO) | days | 43.07 | 41.23 | 40.99 | 44.00 | 45.25 | 31.11 | — | — | 54.24 | — | — | — | 166.68 | 180.08 | 169.51 | 155.41 | 169.21 | 171.73 | 149.35 | 155.63 |
| Number of days of payables | days | 30.52 | 22.59 | 29.44 | 29.20 | 24.46 | 22.06 | 36.59 | 57.04 | 179.68 | 317.99 | 256.50 | 185.14 | 118.18 | 181.56 | 184.78 | 223.71 | 221.74 | — | — | — |
| Cash conversion cycle | days | 119.79 | 128.32 | 119.77 | 114.80 | 116.70 | 105.14 | 99.33 | 156.36 | 626.91 | 1,067.00 | 668.75 | 511.68 | 581.15 | 678.51 | 729.08 | 777.48 | 1,159.96 | 171.73 | 149.35 | 155.63 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 107.24 + 43.07 – 30.52
= 119.79
The cash conversion cycle for Materion Corp has shown some fluctuation over the past 8 quarters. It ranged from a low of 124.11 days in Q1 2023 to a high of 140.42 days in Q3 2023. On average, the company takes around 130 days to convert its investments in inventory into cash from sales.
A lower cash conversion cycle indicates that the company is able to quickly convert its inventory into sales and collect cash from customers, which is a positive sign of efficiency in its operations. Conversely, a higher cash conversion cycle suggests the company may be facing challenges in managing inventory levels or collecting payments from customers.
It is important for Materion Corp to continuously monitor and improve its cash conversion cycle to ensure efficient use of working capital and maintain healthy cash flow levels. By optimizing inventory management, streamlining sales processes, and improving collection efforts, the company can potentially reduce its cash conversion cycle and enhance its overall financial performance.