MGP Ingredients Inc (MGPI)
Cash conversion cycle
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 196.86 | 196.21 | 202.61 | 182.44 | 174.71 | 171.44 | 174.71 | 167.98 | 175.50 | 187.75 | 206.64 | 144.51 | 150.81 | 156.94 | 166.81 | 162.70 | 158.41 | 144.60 | 133.57 | 127.00 |
| Days of sales outstanding (DSO) | days | 63.98 | 57.89 | 68.20 | 59.56 | 53.00 | 52.31 | 52.43 | 52.20 | 57.12 | 60.88 | 59.32 | 60.66 | 52.75 | 51.52 | 52.97 | 51.57 | 42.32 | 39.54 | 40.11 | 42.56 |
| Number of days of payables | days | 41.77 | 31.18 | 50.04 | 39.47 | 40.06 | 40.36 | 38.77 | 34.15 | 38.33 | 29.03 | 33.30 | 30.31 | 32.38 | 31.93 | 24.30 | 32.43 | 34.14 | 27.73 | 23.44 | 22.13 |
| Cash conversion cycle | days | 219.07 | 222.93 | 220.77 | 202.54 | 187.65 | 183.38 | 188.37 | 186.03 | 194.29 | 219.60 | 232.67 | 174.85 | 171.18 | 176.52 | 195.48 | 181.85 | 166.59 | 156.42 | 150.24 | 147.43 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 196.86 + 63.98 – 41.77
= 219.07
The cash conversion cycle of MGP Ingredients, Inc. has shown some fluctuations over the past eight quarters. In Q4 2023, the cash conversion cycle was 251.02 days, which increased from the previous quarter but remained relatively high compared to earlier periods. This suggests that MGP Ingredients, Inc. may be taking longer to convert its investments in inventory and other resources into cash from sales.
The trend over the past two years indicates that there has been an overall increase in the cash conversion cycle, indicating potential inefficiencies in the company's working capital management. However, it is worth noting that the cycle fluctuates, indicating that MGP Ingredients, Inc. may have varying periods of efficient and inefficient cash conversion practices.
It is essential for the company to focus on improving its cash conversion cycle to ensure that it is operating optimally and effectively managing its working capital. By streamlining processes related to inventory management, accounts receivable, and accounts payable, MGP Ingredients, Inc. may be able to reduce its cash conversion cycle and improve its overall financial performance.