Kraft Heinz Co (KHC)

Cash conversion cycle

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	59.51	60.97	63.07	62.69	55.48	67.85	69.28	66.72	57.04	47.87	46.58	35.53	36.71	33.87	36.66	43.99	41.46	21.37	20.56	21.10
Days of sales outstanding (DSO)	days	29.76	29.09	30.91	—	30.08	31.35	33.36	32.75	30.79	28.74	29.32	30.15	30.08	29.31	30.77	35.04	32.36	31.31	31.97	30.77
Number of days of payables	days	76.19	72.01	75.04	—	73.67	90.85	96.42	99.45	99.35	73.86	72.53	56.10	56.98	51.58	50.53	61.47	61.00	28.13	27.77	28.32
Cash conversion cycle	days	13.08	18.06	18.94	62.69	11.89	8.35	6.22	0.02	-11.52	2.75	3.36	9.58	9.81	11.61	16.90	17.55	12.83	24.56	24.76	23.55

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 59.51 + 29.76 – 76.19
= 13.08

The cash conversion cycle for Kraft Heinz Co has exhibited fluctuations over the periods presented. The company's ability to efficiently convert its resources into cash has varied, indicating potential challenges in managing its working capital.

Between December 2019 and March 2020, the company experienced an increase in its cash conversion cycle, reaching a peak of 24.76 days, suggesting a lengthening in the time it takes for the company to convert its investments in inventory and accounts receivable into cash received from customers.

However, the cash conversion cycle improved significantly in the following quarters, with negative values observed in March 2022 and relatively low values in June and September 2022. Negative values in the cash conversion cycle indicate that the company was able to convert its investments into cash before paying off its liabilities, potentially pointing to more efficient working capital management.

In March 2023, there was a substantial spike in the cash conversion cycle to 62.69 days, reflecting a significant delay in the company's cash conversion process. This increase may raise concerns about the company's liquidity and working capital management practices.

Overall, the fluctuating trend in Kraft Heinz Co's cash conversion cycle highlights the importance of closely monitoring working capital efficiency to ensure optimal cash flow management and sustainable operations.