Keurig Dr Pepper Inc (KDP)

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	36.13	34.33	38.95	31.07	28.28
Days of sales outstanding (DSO)	days	41.29	38.85	46.16	36.61	37.52
Number of days of payables	days	83.03	108.12	154.30	150.00	138.80
Cash conversion cycle	days	-5.61	-34.94	-69.20	-82.32	-73.00

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 36.13 + 41.29 – 83.03
= -5.61

Keurig Dr Pepper Inc's cash conversion cycle has shown a notable improvement over the years, as evidenced by the decreasing trend from -73.00 days in December 2020 to -5.61 days in December 2024. The negative values indicate that the company is efficiently managing its working capital, generating cash inflows before having to pay its suppliers for raw materials or inventory.

The decrease in the cash conversion cycle reflects a more efficient process of converting resources into cash, which may result from improved inventory management, faster collections from customers, or extended payment terms with suppliers. This improvement can enhance the company's liquidity position and potentially reduce its financing needs.

Overall, Keurig Dr Pepper Inc's ability to shorten its cash conversion cycle signifies effective working capital management, contributing to its financial efficiency and stability in the long run.