Hormel Foods Corporation (HRL)

Cash conversion cycle

Oct 27, 2024 Jul 28, 2024 Apr 28, 2024 Jan 28, 2024 Oct 29, 2023 Jul 30, 2023 Apr 30, 2023 Jan 29, 2023 Oct 30, 2022 Jul 31, 2022 May 1, 2022 Jan 30, 2022 Oct 31, 2021 Jul 25, 2021 Apr 25, 2021 Jan 24, 2021 Oct 25, 2020 Jul 26, 2020 Apr 26, 2020 Jan 26, 2020
Days of inventory on hand (DOH) days 52.65 54.73 55.08 51.72 55.22 57.13 57.42 56.55 55.92 53.84 51.58 46.56 48.35 55.54 50.68 45.79 45.71 41.69 45.07 45.95
Days of sales outstanding (DSO) days 26.68 22.26 22.32 22.73 25.00 23.90 23.02 23.53 25.76 23.54 25.13 29.10 32.26 27.11 27.02 28.30 24.50 20.42 21.60
Number of days of payables days 24.57 22.40 22.76 25.35 23.13 26.61 28.01 25.47 23.81 23.54 27.47 22.81 21.58 21.30
Cash conversion cycle days 54.76 54.59 54.65 74.44 54.87 57.91 80.44 80.09 55.07 77.38 51.58 71.69 49.43 62.34 53.99 49.28 46.54 43.38 43.91 46.25

October 27, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 52.65 + 26.68 – 24.57
= 54.76

The cash conversion cycle of Hormel Foods Corporation has been relatively stable over the past two years, ranging from 43.38 days to 80.44 days. The company's cash conversion cycle measures the time it takes for Hormel Foods to convert its investments in inventory and other resources into cash flows from sales.

A shorter cash conversion cycle indicates that the company is able to efficiently manage its working capital and convert its resources into cash quickly, which is a positive sign. Conversely, a longer cash conversion cycle may suggest potential inefficiencies in the company's operations or difficulties in managing inventory levels.

Hormel Foods has generally maintained a moderate cash conversion cycle, with some fluctuations observed in certain periods. It is important for the company to continue monitoring and managing its inventory levels, accounts receivable, and accounts payable effectively to optimize its cash conversion cycle and overall liquidity position.