MACOM Technology Solutions Holdings Inc (MTSI)

Cash conversion cycle

		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	Dec 31, 2019
Days of inventory on hand (DOH)	days	211.40	225.51	230.13	221.61	189.44	188.97	175.80	162.07	155.99	152.20	130.06	123.20	113.88	113.04	113.98	121.59	128.63	139.73	141.08	146.72
Days of sales outstanding (DSO)	days	52.88	57.38	68.86	58.99	51.37	57.16	63.53	58.79	54.90	—	—	57.55	50.86	—	—	—	31.60	—	—	—
Number of days of payables	days	46.96	47.64	57.39	37.70	34.70	37.26	41.45	47.61	41.70	58.99	43.19	47.22	39.54	35.17	35.70	38.46	32.36	37.43	37.43	33.40
Cash conversion cycle	days	217.32	235.25	241.60	242.89	206.11	208.87	197.88	173.24	169.19	93.20	86.87	133.53	125.20	77.87	78.28	83.13	127.87	102.31	103.65	113.32

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 211.40 + 52.88 – 46.96
= 217.32

The cash conversion cycle of MACOM Technology Solutions Holdings Inc has shown fluctuations over the past few quarters. The company's cash conversion cycle measures how long it takes for the company to convert its investments in inventory and other resources into cash inflows from sales.

Looking at the trend, we observe that the cash conversion cycle has ranged from a low of 77.87 days to a high of 242.89 days over the period presented. A longer cash conversion cycle indicates that the company is taking more time to convert its investments into cash and may face liquidity challenges. Conversely, a shorter cycle suggests a more efficient use of working capital.

The company experienced a significant increase in its cash conversion cycle from March 2022 to June 2023, peaking at 242.89 days, which could indicate potential issues in managing inventory, receivables, or payables during this period. However, there seems to be an improvement in the cycle from June 2023 to September 2024, with a gradual decrease over the quarterly periods.

Overall, MACOM Technology Solutions Holdings Inc should focus on optimizing its inventory management, accounts receivable collection, and accounts payable practices to shorten its cash conversion cycle. This would help the company improve its liquidity position and operational efficiency.