Hilton Worldwide Holdings Inc (HLT)

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	—	126.80	122.11	107.10	44.61
Days of sales outstanding (DSO)	days	51.71	53.03	55.21	67.35	65.34
Number of days of payables	days	266.11	281.29	246.91	168.65	86.89
Cash conversion cycle	days	-214.40	-101.46	-69.59	5.80	23.06

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 51.71 – 266.11
= -214.40

Hilton Worldwide Holdings Inc's cash conversion cycle has seen significant fluctuations over the past five years. In December 2020, the company had a cash conversion cycle of 23.06 days, indicating that it took approximately 23 days to convert its investments in inventory back into cash.

By December 2021, Hilton had improved its cash conversion cycle to 5.80 days, suggesting a faster turnaround in converting inventory to cash. This trend continued to improve dramatically in the following years, with the company achieving negative cash conversion cycles of -69.59 days in 2022, -101.46 days in 2023, and reaching -214.40 days by the end of 2024.

The negative cash conversion cycle values in the later years indicate that Hilton was able to convert its inventory into cash before actually having to pay its suppliers, which is a favorable position indicating efficiency in managing working capital. The company's ability to stretch its payable period while maintaining or reducing its inventory and receivable turnover is a positive sign for its liquidity and operational efficiency.