Kraft Heinz Co (KHC)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	44.04	54.98	53.47	56.95	57.16	58.62	60.57	60.34	55.48	67.85	69.28	66.72	57.04	47.87	46.58	35.53	36.71	33.87	36.66	43.99
Days of sales outstanding (DSO)	days	30.38	31.64	31.10	31.66	30.03	29.35	31.19	—	30.08	31.35	33.36	32.75	30.79	28.74	29.32	30.15	30.08	29.31	30.77	35.04
Number of days of payables	days	54.63	64.65	66.57	70.36	73.19	69.22	72.07	—	73.67	90.85	96.42	99.45	99.35	73.86	72.53	56.10	56.98	51.58	50.53	61.47
Cash conversion cycle	days	19.79	21.97	18.01	18.24	14.01	18.74	19.69	60.34	11.89	8.35	6.22	0.02	-11.52	2.75	3.36	9.58	9.81	11.61	16.90	17.55

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 44.04 + 30.38 – 54.63
= 19.79

The cash conversion cycle is an important indicator of a company's efficiency in managing its working capital. It measures the time it takes for a company to convert its investments in inventory into cash inflows from sales.

Analyzing the cash conversion cycle of Kraft Heinz Co over the past few years shows fluctuations in the efficiency of their working capital management. In March 2020, the company had a cash conversion cycle of 17.55 days, indicating that it took approximately 17.55 days to convert its investment in inventory back into cash. This number decreased to 9.58 days by March 2021, showing improvement in efficiency.

However, in December 2021, the cash conversion cycle turned negative to -11.52 days, which is unusual and suggests a potential issue with the data or calculations. Subsequently, the cycle returned to a positive value and fluctuated around 10-20 days from 2022 to 2024, indicating varying levels of efficiency in managing working capital.

The spike in the cash conversion cycle to 60.34 days in March 2023 is concerning as it suggests a significant delay in converting inventory to cash inflows. This spike could be due to factors such as changes in sales patterns, inventory management issues, or payment delays from customers.

Overall, monitoring the cash conversion cycle of Kraft Heinz Co is crucial for assessing its operational efficiency and liquidity management. Fluctuations in this metric can provide insights into the company's working capital practices and potential areas for improvement.