Marriott International Inc (MAR)

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	—	662.32	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	40.64	43.03	42.52	41.65	41.74	41.91	40.84	40.50	45.17	44.98	46.46	48.98	52.21	64.35	71.33	87.31	61.05	47.47	35.22	36.57
Number of days of payables	days	116.53	154.30	161.05	155.28	149.24	163.69	159.94	173.38	178.43	203.51	211.50	208.53	204.94	204.18	192.01	165.35	155.12	104.53	113.42	164.52
Cash conversion cycle	days	-75.88	551.05	-118.53	-113.63	-107.49	-121.78	-119.10	-132.88	-133.26	-158.52	-165.05	-159.56	-152.74	-139.83	-120.68	-78.03	-94.08	-57.06	-78.21	-127.95

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 40.64 – 116.53
= -75.88

The cash conversion cycle is a key metric that measures the efficiency of a company's working capital management by evaluating the time it takes to convert resources invested in inventory and accounts receivable into cash inflows from sales.

Analyzing the cash conversion cycle of Marriott International Inc reveals some noteworthy trends. From March 2020 to September 2022, the company consistently maintained negative cash conversion cycles, indicating that Marriott was able to efficiently convert its investments into cash. This trend suggests effective management of inventory and accounts receivable, resulting in quicker cash inflows.

However, in the third quarter of 2024, there is a significant anomaly as the cash conversion cycle sharply increases to 551.05 days. Such a dramatic spike in the cash conversion cycle raises concerns about Marriott's ability to efficiently manage its working capital during that period. A cash conversion cycle of over 500 days is unusual and may indicate issues with inventory management, slow collections on accounts receivable, or challenges in converting sales into cash.

It would be essential for Marriott International Inc to investigate the reasons behind this sudden increase in the cash conversion cycle and take corrective actions to bring it back to a more typical and sustainable range. Effective working capital management is critical for the company's financial health and long-term success.