Rambus Inc (RMBS)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	147.96	127.60	70.91	43.98	86.92
Days of sales outstanding (DSO)	days	96.97	105.91	145.32	199.76	247.04
Number of days of payables	days	61.40	63.79	84.19	58.48	54.03
Cash conversion cycle	days	183.53	169.72	132.03	185.25	279.92

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 147.96 + 96.97 – 61.40
= 183.53

The cash conversion cycle is a crucial metric for assessing a company's efficiency in managing its working capital. Rambus Inc's cash conversion cycle has shown fluctuations over the past five years.

In December 31, 2020, the company's cash conversion cycle was reported at 279.92 days, indicating a lengthy period for converting its investments in inventory and receivables back into cash. However, by December 31, 2022, Rambus Inc managed to improve significantly, reducing the cycle to 132.03 days, reflecting better efficiency in its cash management processes.

Despite the improvement in 2022, there was a slight increase in the cash conversion cycle to 169.72 days by December 31, 2023. This increase suggests that the company might be facing challenges in optimizing its working capital efficiency.

By the end of December 31, 2024, the cash conversion cycle stood at 183.53 days, showing a moderate increase compared to the previous year. Rambus Inc should continue to monitor and manage its cash conversion cycle effectively to ensure a healthy cash flow position.

Overall, the fluctuation in Rambus Inc's cash conversion cycle over the years indicates the company's ongoing efforts to balance its investments in inventory and receivables with its cash position. Continued monitoring and improvement in this metric will be essential for sustaining healthy working capital management.