Hormel Foods Corporation (HRL)

Cash conversion cycle

		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	Oct 27, 2019	Jul 28, 2019	Apr 28, 2019
Days of inventory on hand (DOH)	days	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	45.55	48.34	44.55
Days of sales outstanding (DSO)	days	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	22.88	20.32	20.51
Number of days of payables	days	—	25.35	23.13	—	—	26.61	—	—	—	28.01	25.47	23.81	23.54	27.47	22.81	21.58	21.30	25.79	22.39	22.64
Cash conversion cycle	days	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	42.65	46.28	42.42

January 28, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 51.72 + 22.73 – —
= 74.44

The cash conversion cycle of Hormel Foods Corp. fluctuated over the past eight quarters, ranging from a low of 57.52 days in Q4 2022 to a high of 85.32 days in Q2 2023. The trend appears to be somewhat volatile, with periods of both improvement and deterioration in efficiency.

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A lower number signifies a more efficient cash management process, while a higher number indicates a longer time to convert investments into cash.

Overall, Hormel Foods Corp. experienced some variability in its cash conversion cycle, potentially reflecting changes in inventory management, accounts receivable collection, and accounts payable turnover. Further analysis of the underlying factors influencing these fluctuations could provide insights into the company's operational efficiency and financial health.