McCormick & Company Incorporated (MKC)

Short-term

Turnover ratios

The activity ratios of McCormick & Co., Inc. over the past five years provide insights into the company's efficiency in managing its inventory, receivables, and payables.

Firstly, the inventory turnover ratio has shown a fluctuating trend, decreasing from 4.00 in 2019 to 3.04 in 2022, before increasing to 3.69 in 2023. This suggests that the company's management of inventory has been somewhat inconsistent, potentially indicating challenges in inventory management and sales forecasting.

Secondly, the receivables turnover ratio has generally been stable, ranging from 10.60 to 11.50 over the past five years. This indicates that the company has been effective in collecting payments from customers, with a consistent performance in managing its accounts receivable.

Thirdly, the payables turnover ratio has also demonstrated some fluctuation, dropping to 3.20 in 2020 before increasing to 3.72 in 2023. This suggests that the company has been adjusting its payment practices with suppliers, potentially managing its payables more efficiently in the more recent years.

Lastly, no data is available for the working capital turnover, which prevents a comprehensive assessment of the company's efficiency in utilizing its working capital.

Overall, while there have been fluctuations in the inventory and payables turnover ratios, the stable performance in receivables turnover indicates effective management of accounts receivable. However, the absence of data for the working capital turnover ratio limits the complete assessment of McCormick & Co.'s overall activity efficiency.

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Average number of days

The activity ratios of McCormick & Co., Inc. provide insights into the efficiency of the company's operations.

Days of inventory on hand (DOH) have decreased from 120.00 days in 2022 to 98.85 days in 2023. This indicates that the company has been able to sell its inventory more quickly, which may be a result of effective inventory management or increased demand for its products.

Days of sales outstanding (DSO) have also shown a slight decrease from 32.97 days in 2022 to 32.19 days in 2023. This suggests that the company has been successful in collecting its accounts receivable more efficiently, possibly through improved credit policies or prompt collection efforts.

The number of days of payables has decreased from 104.86 days in 2022 to 98.21 days in 2023, indicating that the company is taking a shorter time to pay its suppliers. This may signal improved relationships with suppliers or better cash management practices.

Overall, the trend in these activity ratios suggests that McCormick & Co., Inc. has been enhancing its operational efficiency, resulting in better management of inventory, receivables, and payables.

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Long-term

The long-term activity ratios of McCormick & Co., Inc. indicate the company's efficiency in utilizing its fixed and total assets to generate sales over the past five years.

The fixed asset turnover ratio has shown a declining trend from 5.61 in 2019 to 5.03 in 2023. This suggests that the company's ability to generate sales from its fixed assets has decreased over the years, indicating a potential decline in the productivity and efficiency of these assets.

Conversely, the total asset turnover ratio has fluctuated over the same period, with a slight increase from 0.46 in 2020 to 0.52 in 2019, followed by a decline to 0.48 in 2022 and a subsequent increase to 0.52 in 2023. This indicates that the company's ability to generate sales from its total assets has varied over the years, potentially influenced by changes in the company's asset base and sales volume.

Overall, these ratios suggest that while McCormick & Co., Inc. has demonstrated relatively strong turnover of total assets, its efficiency in generating sales from fixed assets has shown a declining trend, requiring further investigation into the management and utilization of these long-term assets.