Middleby Corp (MIDD)
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 | 105.50 | 116.31 | 123.04 | 127.24 | 113.05 | 115.15 | 114.03 | 110.44 | 108.88 | 92.25 | 86.54 | 90.05 | 87.25 | 89.62 | 95.50 | 90.67 | 84.69 | 89.34 | 88.90 | 86.69 |
| Days of sales outstanding (DSO) | days | 58.16 | 56.54 | 57.28 | — | 56.73 | — | — | — | 64.81 | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | 25.60 | 25.71 | 26.45 | 32.14 | 28.47 | 28.30 | 36.52 | 36.47 | 39.62 | 34.19 | 31.77 | 33.47 | 29.52 | 24.48 | 19.62 | 27.87 | 25.12 | 26.36 | 28.06 | 29.12 |
| Cash conversion cycle | days | 138.06 | 147.13 | 153.86 | 95.09 | 141.31 | 86.85 | 77.50 | 73.97 | 134.06 | 58.06 | 54.77 | 56.59 | 57.73 | 65.15 | 75.88 | 62.80 | 59.58 | 62.98 | 60.84 | 57.57 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 105.50 + 58.16 – 25.60
= 138.06
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and accounts receivable into cash inflows from sales. A shorter cash conversion cycle indicates that a company is able to efficiently manage its working capital and convert its assets into cash quickly.
Analyzing Middleby Corp's cash conversion cycle over the past five quarters, we observe fluctuations in the efficiency of its working capital management. In the latest quarter, ending on December 31, 2023, the cash conversion cycle was 138.06 days, which represents an increase compared to the previous quarter's 147.13 days. This longer cycle suggests that Middleby Corp may be taking longer to convert its inventory and accounts receivable into cash.
Looking back further, we notice that the cash conversion cycle has displayed variability over the quarters, with some periods showing shorter cycles (e.g., 54.77 days in June 30, 2021) indicating a more efficient working capital management and quicker cash conversion, while other periods showing longer cycles (e.g., 153.86 days in June 30, 2023) implying potential working capital inefficiencies.
Middleby Corp may want to focus on optimizing its inventory management and accounts receivable collection processes to speed up its cash conversion cycle and improve overall liquidity. Additionally, monitoring and analyzing the trend in the cash conversion cycle can provide valuable insights into the company's operational efficiency and financial health.
Peer comparison
Dec 31, 2023