Hershey Co (HSY)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 54.91 | 51.92 | 51.54 | 79.11 | 68.19 |
| Days of sales outstanding (DSO) | days | 27.44 | 25.16 | 27.43 | 27.55 | 25.98 |
| Number of days of payables | days | 44.47 | 42.95 | 36.10 | 47.59 | 46.07 |
| Cash conversion cycle | days | 37.87 | 34.12 | 42.88 | 59.07 | 48.10 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 54.91 + 27.44 – 44.47
= 37.87
The cash conversion cycle of Hershey Company has fluctuated over the past five years. In 2023, the company's cash conversion cycle increased to 42.01 days from 37.40 days in 2022. This indicates that Hershey took longer to convert its investments in inventory and accounts receivable into cash during the year, compared to the previous year.
Looking further back, in 2021, the cash conversion cycle was at its lowest at 37.40 days, showing an efficient conversion of inventory and accounts receivable into cash. However, in 2020 and 2019, the cycle was higher at 59.07 days and 48.10 days, respectively, suggesting that Hershey was taking longer to convert its assets into cash during these years.
Overall, it is important for Hershey to monitor and manage its cash conversion cycle effectively to ensure optimal liquidity and operational efficiency in converting its investments into cash. The fluctuations in the cycle indicate potential areas where the company can focus on improving its working capital management.
Peer comparison
Dec 31, 2023