Rambus Inc (RMBS)
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 | 127.60 | 70.91 | 43.98 | 86.92 | 71.66 |
| Days of sales outstanding (DSO) | days | 105.91 | 145.32 | 199.76 | 247.04 | 366.29 |
| Number of days of payables | days | 63.79 | 84.19 | 58.48 | 54.03 | 67.84 |
| Cash conversion cycle | days | 169.72 | 132.03 | 185.25 | 279.92 | 370.10 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 127.60 + 105.91 – 63.79
= 169.72
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales. A lower cash conversion cycle is generally favorable as it signifies that the company is efficient in managing its working capital.
From the data provided, Rambus Inc.'s cash conversion cycle has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle stood at 179.32 days, which is higher than in 2022 when it was at 130.06 days. This increase suggests that Rambus took longer to convert its investments in inventory and accounts receivable into cash in 2023 compared to the previous year.
However, when comparing the current cycle with 2021, where the cycle was at 180.90 days, there has been a slight improvement in efficiency. Furthermore, there is a significant improvement compared to 2020 and 2019 when the cash conversion cycle was at 293.07 days and 375.95 days, respectively.
Overall, Rambus Inc. seems to have made progress in managing its cash conversion cycle more efficiently in recent years, particularly compared to the earlier periods. However, the company should continue to focus on optimizing its working capital management to further improve its cash conversion cycle and enhance its overall financial performance.
Peer comparison
Dec 31, 2023