McDonald’s Corporation (MCD)
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 | 4.04 | 4.35 | 4.78 | 4.67 | 4.89 |
| Days of sales outstanding (DSO) | days | 35.62 | 33.30 | 29.43 | 40.10 | 38.00 |
| Number of days of payables | days | 84.30 | 82.01 | 86.55 | 67.70 | 96.24 |
| Cash conversion cycle | days | -44.65 | -44.36 | -52.34 | -22.94 | -53.35 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 4.04 + 35.62 – 84.30
= -44.65
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. McDonald's Corp experienced fluctuations in its cash conversion cycle over the past five years.
In 2023, the cash conversion cycle for McDonald's Corp stood at 35.62 days, indicating that it took the company approximately 35.62 days to convert investment in inventory into cash from sales. This represents an increase compared to the previous year, where the cycle was 33.30 days.
Compared to 2021, where the cycle was 29.43 days, and 2020, where it was 40.10 days, the 2023 figure suggests that the company is taking longer to convert its investments into cash. However, it is worth noting an improvement compared to 2019, where the cycle was 38.52 days.
Overall, understanding the cash conversion cycle trends can provide insights into a company's efficiency in managing its working capital and operations.
Peer comparison
Dec 31, 2023