Hyatt Hotels Corporation (H)

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	2.85	3.91	4.28	8.30	6.60
Days of sales outstanding (DSO)	days	51.74	49.27	50.78	70.23	59.95
Number of days of payables	days	169.31	213.97	237.94	433.85	74.76
Cash conversion cycle	days	-114.72	-160.79	-182.88	-355.33	-8.21

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 2.85 + 51.74 – 169.31
= -114.72

Hyatt Hotels Corporation's cash conversion cycle has displayed a significant improvement over the years based on the provided data. In December 2020, the company had a negative cash conversion cycle of -8.21 days, indicating that it was able to convert its investments in inventory and accounts receivable into cash more rapidly than paying its accounts payable.

However, by December 2021, the cash conversion cycle deteriorated drastically to -355.33 days, indicating that the company was efficiently converting its investments into cash at a much faster rate than paying its suppliers. This extreme negative cycle could be a result of aggressive cash management tactics or extended payment terms with suppliers.

Subsequently, in the following years, Hyatt Hotels Corporation managed to moderate its cash conversion cycle to -182.88 days in December 2022, -160.79 days in December 2023, and -114.72 days in December 2024. While still negative, these figures suggest an improvement in the company's ability to manage its working capital more effectively and streamline its cash conversion processes.

Overall, the trend of negative cash conversion cycles indicates that Hyatt Hotels Corporation has been efficient in converting its investments into cash, but potential risks may arise from excessively long payment terms or aggressive cash management strategies that could impact relationships with suppliers in the long run.