Fresh Del Monte Produce Inc (FDP)
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 | 55.40 | 55.15 | 59.53 | 55.73 | 46.90 |
| Days of sales outstanding (DSO) | days | 43.70 | 44.43 | 41.43 | 40.87 | 37.80 |
| Number of days of payables | days | 23.31 | 25.70 | 28.95 | 32.39 | 27.29 |
| Cash conversion cycle | days | 75.78 | 73.89 | 72.00 | 64.20 | 57.41 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 55.40 + 43.70 – 23.31
= 75.78
Fresh Del Monte Produce Inc's cash conversion cycle, which measures how long it takes for the company to convert its investments in inventory into cash receipts from customers, has shown a concerning trend over the past five years. Starting at 57.41 days on December 31, 2020, the cycle has increased steadily to 75.78 days by December 31, 2024.
This indicates that the company is taking longer to convert its inventory into sales and ultimately cash, which may suggest inefficiencies in managing its working capital or difficulties in selling products promptly.
A longer cash conversion cycle can tie up more of the company's capital in inventory and accounts receivable, potentially impacting liquidity and overall financial health. Fresh Del Monte Produce Inc may need to review its inventory management practices, improve sales strategies, or renegotiate payment terms with customers to shorten the cycle and optimize cash flow.
Peer comparison
Dec 31, 2024