TransMedics Group Inc (TMDX)

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	184.46	266.82	595.80	483.77	420.27
Days of sales outstanding (DSO)	days	96.04	107.83	71.57	97.72	101.42
Number of days of payables	days	53.03	43.26	266.68	48.89	271.55
Cash conversion cycle	days	227.47	331.39	400.69	532.60	250.15

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 184.46 + 96.04 – 53.03
= 227.47

The cash conversion cycle of TransMedics Group Inc has shown fluctuating trends over the past five years. In 2023, the company's cash conversion cycle improved significantly to 227.47 days from 331.39 days in 2022. This indicates that the company was able to convert its investments in inventory and receivables back into cash at a quicker pace in 2023.

Comparing to previous years, the company's cash conversion cycle was notably higher in 2020 at 532.60 days, signifying a prolonged period to convert investments into cash. However, there was a significant improvement in 2021 and 2019, with the cash conversion cycle standing at 400.69 days and 250.15 days respectively.

The decreasing trend in the cash conversion cycle is a positive indicator as it suggests that the company is managing its working capital more efficiently and generating cash at a faster rate. This improvement may be a result of better inventory management, streamlined receivables collection processes, or more effective cash management strategies.

Overall, the company's decreasing cash conversion cycle over the years indicates an improvement in operational efficiency and liquidity management. It is essential for TransMedics Group Inc to continue monitoring and optimizing its cash conversion cycle to sustain positive financial performance and strengthen its cash flow position in the future.