MGP Ingredients Inc (MGPI)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 319.20 | 238.06 | 199.88 | 209.86 | 173.46 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 319.20 | 238.06 | 199.88 | 209.86 | 173.46 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 319.20 + — – —
= 319.20
The cash conversion cycle for MGP Ingredients Inc has shown fluctuations over the years. As of December 31, 2020, the company's cash conversion cycle was 173.46 days. This indicates that it takes MGP Ingredients approximately 173.46 days to convert its investments in raw materials into cash from sales.
By December 31, 2021, the cash conversion cycle increased to 209.86 days, suggesting a lengthening of the time it takes for the company to transform its resources into cash inflows. The trend continued in 2022, with the cycle standing at 199.88 days, before further extending to 238.06 days by the end of 2023.
The most significant increase was observed by December 31, 2024, when the cash conversion cycle reached 319.20 days. This considerable rise indicates a potential challenge for MGP Ingredients in managing its working capital and liquidity, as the company's cash is tied up for an extended period before being recovered from its operational activities.
Overall, the fluctuating cash conversion cycle of MGP Ingredients Inc suggests the need for the company to evaluate and improve its operational efficiency, inventory management, and collection processes to optimize cash flows and enhance overall financial performance.