McCormick & Company Incorporated (MKC)
Payables turnover
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 4,159,700 | 4,076,000 | 3,823,300 | 3,300,900 | 3,202,100 |
| Payables | US$ in thousands | 1,119,300 | 1,171,000 | 1,064,200 | 1,032,300 | 846,900 |
| Payables turnover | 3.72 | 3.48 | 3.59 | 3.20 | 3.78 |
November 30, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $4,159,700K ÷ $1,119,300K
= 3.72
The payables turnover ratio measures how efficiently a company is managing its trade credit with suppliers. A higher ratio indicates quicker payment of suppliers, while a lower ratio suggests longer payment periods.
McCormick & Co., Inc.'s payables turnover has fluctuated in recent years. In 2023, the ratio increased to 3.72 from 3.48 in 2022, indicating an improvement in the company's ability to pay off its trade payables. This may suggest effective management of supplier credit and potentially more favorable payment terms negotiated with suppliers.
Comparing to the ratio in 2021 and 2020, the 2023 ratio is higher, indicating a positive trend in managing payables. However, it's important to note that the 2023 ratio is still lower than 2019, suggesting that the company may be taking longer to pay suppliers compared to that year.
Overall, the increasing trend in payables turnover ratio from 2022 to 2023 indicates improved efficiency in managing trade credit and the potential for better cash flow management for McCormick & Co., Inc.