General Mills Inc (GIS)

The analysis of General Mills Inc's cash conversion cycle (CCC) over the specified periods reveals significant variation, indicating fluctuations in the company's operational liquidity and efficiency in managing working capital components.

As of May 28, 2023, the CCC stood at approximately 314 days, reflecting a lengthy cycle during which the company takes internally to convert investments in inventory and accounts receivable into cash flows from sales, less the duration of accounts payable deferrals. This prolonged period suggests that, at this point, the company experienced relatively extended periods of inventory holdings and accounts receivable collection, coupled with relatively shorter payment periods to suppliers or creditors.

By the following month, May 31, 2023, the CCC had sharply decreased to approximately -18 days. A negative CCC indicates that General Mills was able to generate cash from sales before the payment of its accounts payable was due, implying a favorable working capital position and efficient management of receivables and payables. Such a shift might be a result of improved receivable collection, shorter inventory cycles, or extended terms negotiated with suppliers.

Looking ahead to May 26, 2024, the CCC returned to around 304 days, close to the previous high, suggesting a return to a less favorable cycle with longer periods of cash tied up in inventories and receivables relative to the company's payables. This reversion indicates potential operational challenges or strategic changes affecting inventory management or receivables collection efficiencies.

Finally, by May 31, 2024, and extending into May 31, 2025, the CCC established a negative trend, reaching approximately -23 and -26 days respectively. This sustained negative cycle signifies an ongoing pattern where General Mills is able to convert sales into cash substantially before settling its payables, highlighting efficient working capital management. It also points to a potentially disciplined accounts payable strategy, possibly by negotiating favorable payment terms or extending supplier credit periods.

Overall, the fluctuations in the cash conversion cycle illustrate a dynamic approach to managing operational cash flows. The periods of negative CCC are particularly indicative of improved liquidity and operational efficiency, whereas the longer cycles observed in May 2023 and 2024 reflect episodes where inventory and receivable management may have been less optimal or influenced by strategic factors impacting the company's cash flow timing.

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May 31, 2025