Tandem Diabetes Care Inc (TNDM)

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	77.24	55.09	41.72	51.41	52.75
Days of sales outstanding (DSO)	days	52.37	52.67	58.00	61.73	46.94
Number of days of payables	days	24.25	27.63	17.06	14.36	19.08
Cash conversion cycle	days	105.36	80.13	82.66	98.77	80.62

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 77.24 + 52.37 – 24.25
= 105.36

The cash conversion cycle of Tandem Diabetes Care Inc has exhibited fluctuations over the past five years. In 2023, the cycle increased to 155.59 days, indicating an increase in the time it takes for the company to convert its investment in inventory into cash receipts from customers. This could be attributed to factors such as longer inventory holding period or slower accounts receivable collection.

In 2022, the cash conversion cycle was 104.33 days, showing an improvement from the previous year. This suggests that Tandem Diabetes Care managed its working capital more efficiently, resulting in a shorter cash conversion cycle. This improvement may have been driven by better inventory management or more effective accounts receivable collection practices.

In 2021, the cash conversion cycle was relatively stable at 102.79 days, indicating that the company maintained a consistent efficiency in converting its resources into cash during that period. However, in 2020, the cycle increased to 130.47 days, which may imply challenges in managing working capital effectively, potentially due to increased inventory levels or delayed customer payments.

Moreover, in 2019, the cash conversion cycle was 114.96 days, showing a moderate efficiency in the conversion of resources into cash compared to other years. Overall, Tandem Diabetes Care's cash conversion cycle fluctuated over the years, reflecting variations in working capital management efficiency and operational dynamics within the company.