Middleby Corp (MIDD)
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 | 98.25 | 113.05 | 108.88 | 87.25 | 84.69 |
| Days of sales outstanding (DSO) | days | 58.16 | 56.73 | 64.81 | 52.83 | 55.22 |
| Number of days of payables | days | 23.84 | 28.47 | 39.62 | 29.52 | 25.12 |
| Cash conversion cycle | days | 132.57 | 141.31 | 134.06 | 110.56 | 114.80 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 98.25 + 58.16 – 23.84
= 132.57
The cash conversion cycle of Middleby Corp has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 132.57 days, a slight improvement from the previous year's 141.31 days. However, it was higher compared to 2021 and 2020 where the cash conversion cycle stood at 134.06 days and 110.56 days, respectively. The lowest cash conversion cycle was recorded in 2019 at 114.80 days.
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. A longer cash conversion cycle may indicate inefficiencies in inventory management, sales collections, or payment of payables, which can tie up the company's cash flow and liquidity.
Analyzing Middleby Corp's cash conversion cycle trend can provide insights into the company's operational efficiency and liquidity management strategies over the years. A decreasing trend in the cash conversion cycle may suggest improvements in inventory turnover, faster collections from customers, or better management of payables, leading to a more efficient cash cycle. However, it is essential to consider the underlying factors driving the changes in the cash conversion cycle to assess the overall financial health and operational performance of the company.
Peer comparison
Dec 31, 2023