Kraft Heinz Co (KHC)

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	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
Cash conversion cycle	days	14.01	11.87	0.33	10.29	13.06

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 57.16 + 30.03 – 73.19
= 14.01

The cash conversion cycle of Kraft Heinz Co has fluctuated over the past five years. In 2023, the cash conversion cycle increased to 14.01 days from 11.87 days in 2022. This suggests that the company took longer to convert its invested cash into sales and then back into cash.

Comparing to previous years, the cash conversion cycle was relatively high in 2019 at 13.06 days, decreased significantly to 0.33 days in 2021 indicating a very efficient conversion process, and then increased again in 2023.

A higher cash conversion cycle generally indicates that the company's cash is tied up in operations, which could potentially lead to liquidity issues or inefficiencies in working capital management. It is important for Kraft Heinz Co to continuously monitor and improve its cash conversion cycle to ensure optimal utilization of capital and maintain financial health.