Kraft Heinz Co (KHC)
Liquidity ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.06 | 1.06 | 1.01 | 1.09 | 0.99 | 1.00 | 0.95 | 0.92 | 0.87 | 0.90 | 0.89 | 1.02 | 0.99 | 1.13 | 1.15 | 1.74 | 1.34 | 1.31 | 1.09 | 1.48 |
| Quick ratio | 0.48 | 0.45 | 0.41 | 0.51 | 0.44 | 0.40 | 0.38 | 0.09 | 0.35 | 0.35 | 0.40 | 0.56 | 0.60 | 0.50 | 0.60 | 0.59 | 0.68 | 0.61 | 0.60 | 0.97 |
| Cash ratio | 0.18 | 0.17 | 0.12 | 0.21 | 0.17 | 0.13 | 0.11 | 0.09 | 0.12 | 0.11 | 0.17 | 0.33 | 0.38 | 0.27 | 0.40 | 0.31 | 0.42 | 0.35 | 0.35 | 0.68 |
Kraft Heinz Co's current ratio fluctuated over the past five years, ranging from a low of 0.87 in December 2022 to a high of 1.74 in March 2021. This ratio indicates the company's ability to meet its short-term obligations with its current assets. The current ratio was generally above 1, suggesting the company had sufficient current assets to cover its current liabilities, although it dipped below 1 in some periods.
The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also showed variability. It declined significantly in March 2023 to a low of 0.09, indicating a potential liquidity strain at that time. Although it recovered somewhat in subsequent periods, the ratio remained below 1 for several quarters.
Lastly, the cash ratio, which focuses solely on the most liquid assets, displayed a similar trend to the quick ratio, with a notable decrease in March 2023. This ratio hit a low of 0.09 in March 2023 before gradually increasing to 0.21 in March 2024. The cash ratio indicates the company's ability to cover its current liabilities with its cash and cash equivalents.
Overall, the liquidity ratios of Kraft Heinz Co show fluctuations over the years, with some periods indicating potential liquidity challenges. Investors and creditors may monitor these ratios closely to assess the company's ability to meet its short-term financial obligations.
See also:
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
The cash conversion cycle of Kraft Heinz Co has experienced fluctuations over the analyzed periods. The company's cash conversion cycle, which represents the time it takes to convert raw materials into cash through sales, decreased from 17.55 days as of March 31, 2020, to -11.52 days as of December 31, 2021, indicating a more efficient conversion of inventory into cash during that period. However, a negative cash conversion cycle may also suggest potential issues with managing accounts payable.
Subsequently, the cash conversion cycle turned positive again, reaching 60.34 days by March 31, 2023, which could imply prolonged time in converting inventory to sales and collecting cash from customers. This significant increase may be a cause for concern as it could tie up the company's cash resources and negatively impact liquidity.
By the end of December 31, 2024, the cash conversion cycle improved slightly to 19.79 days. Despite this improvement, it still indicates a longer cash conversion cycle compared to previous periods, suggesting a possible need for the company to streamline its operations and improve its working capital efficiency.
In conclusion, the analysis of Kraft Heinz Co's cash conversion cycle suggests periods of both improvement and deterioration in managing its working capital over the analyzed timeframe. It is essential for the company to closely monitor and manage its cash conversion cycle to ensure optimal efficiency in converting its resources to cash.