Kraft Heinz Co (KHC)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.39 | 6.58 | 8.90 | 9.94 | 8.81 |
| Receivables turnover | 12.15 | 12.14 | 11.87 | 11.94 | 11.20 |
| Payables turnover | 4.99 | 4.95 | 5.11 | 6.41 | 5.99 |
| Working capital turnover | — | — | — | 8.92 | 108.29 |
Inventory turnover for Kraft Heinz Co has shown a declining trend over the past five years, indicating that the company is taking longer to sell its inventory. This could potentially result in excess or obsolete inventory.
Receivables turnover has remained relatively stable over the years, showing that the company effectively collects its accounts receivable. A consistent or improving receivables turnover ratio suggests efficient credit policies and effective collection efforts.
Payables turnover has also been relatively stable, indicating that the company has been maintaining its payment terms with suppliers. A lower payables turnover ratio may suggest that the company is taking longer to pay its suppliers, potentially straining relationships with vendors.
The working capital turnover ratio, although unavailable for the most recent years, suggests a significant decline in the efficiency of utilizing working capital from 2019 to 2020. This could indicate a need for better management of working capital to generate more sales with the available working capital.
Overall, while receivables turnover indicates effective collection of receivables, the declining trend in inventory turnover and stagnant payables turnover ratios suggest potential areas for improvement in inventory management and supplier payment processes for Kraft Heinz Co.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 57.16 | 55.48 | 41.01 | 36.71 | 41.44 |
| Days of sales outstanding (DSO) | days | 30.03 | 30.06 | 30.75 | 30.56 | 32.58 |
| Number of days of payables | days | 73.19 | 73.67 | 71.43 | 56.98 | 60.97 |
The activity ratios of Kraft Heinz Co indicate the efficiency of its operations in managing inventory, collecting receivables, and paying suppliers over the past five years.
- Days of Inventory on Hand (DOH): The company's DOH has been gradually increasing from 36.71 days in 2020 to 57.16 days in 2023. This suggests that Kraft Heinz Co is holding inventory for a longer period, which may tie up working capital and increase holding costs.
- Days of Sales Outstanding (DSO): The DSO has been relatively stable around 30 days over the past five years, indicating that Kraft Heinz Co collects receivables efficiently. However, a slight increase from 30.56 days in 2020 to 30.03 days in 2023 might suggest a marginal improvement in collecting payments from customers.
- Number of Days of Payables: The company's days of payables have shown a fluctuating trend, ranging from 56.98 days in 2020 to 73.19 days in 2023. A higher number of days of payables indicates that Kraft Heinz Co is taking longer to pay its suppliers, which can sometimes indicate a potential liquidity concern or negotiations with suppliers for extended credit terms.
Overall, the increasing trend in inventory days on hand and days of payables, coupled with stable days of sales outstanding, suggest that Kraft Heinz Co may need to focus on optimizing inventory management and payment schedules to improve operational efficiency and cash flow management.
See also:
Kraft Heinz Co Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.67 | 3.89 | 3.48 | 3.69 | 3.41 |
| Total asset turnover | 0.28 | 0.28 | 0.25 | 0.25 | 0.24 |
The fixed asset turnover ratio for Kraft Heinz Co has shown a slight decline from 3.89 in 2022 to 3.67 in 2023, indicating a decreasing efficiency in generating sales from its fixed assets over the years. However, the company has historically maintained a relatively high fixed asset turnover, which suggests that it is effectively utilizing its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio has remained relatively stable, hovering around 0.25 in recent years. This indicates that Kraft Heinz Co generates approximately $0.25 in revenue for every dollar of total assets it holds. While this ratio is lower compared to the fixed asset turnover, it is still important as it reflects the overall efficiency of the company in generating sales from all its assets.
Overall, although there has been a slight decline in the fixed asset turnover ratio, Kraft Heinz Co continues to maintain a decent level of efficiency in utilizing its assets to generate revenue over the years. The stability in the total asset turnover ratio suggests that the company has been able to effectively manage its total assets to drive sales, albeit at a slower rate.