McCormick & Company Incorporated (MKC)
Payables turnover
| Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cost of revenue (ttm) | US$ in thousands | 4,160,500 | 4,159,700 | 4,179,500 | 4,146,500 | 4,116,600 | 4,076,000 | 4,032,100 | 3,953,000 | 3,881,300 | 3,823,300 | 3,693,100 | 3,583,300 | 3,462,800 | 3,300,900 | 3,258,500 | 3,207,800 | 3,179,600 | 3,202,100 | 3,210,200 | 3,216,600 |
| Payables | US$ in thousands | 1,133,300 | 1,119,300 | 1,099,900 | 1,100,000 | 1,124,300 | 1,171,000 | 1,143,500 | 1,126,400 | 1,072,600 | 1,064,200 | 1,023,100 | 1,040,500 | 967,400 | 1,032,300 | 902,800 | 857,200 | 789,400 | 846,900 | 783,100 | 706,600 |
| Payables turnover | 3.67 | 3.72 | 3.80 | 3.77 | 3.66 | 3.48 | 3.53 | 3.51 | 3.62 | 3.59 | 3.61 | 3.44 | 3.58 | 3.20 | 3.61 | 3.74 | 4.03 | 3.78 | 4.10 | 4.55 |
February 29, 2024 calculation
Payables turnover = Cost of revenue (ttm) ÷ Payables
= $4,160,500K ÷ $1,133,300K
= 3.67
The payables turnover ratio for McCormick & Company Incorporated has been relatively stable over the past two years, ranging between 3.20 and 4.55. The ratio measures how efficiently the company manages its accounts payable by indicating the number of times a company pays off its average accounts payable balance during a period.
A higher payables turnover ratio suggests that the company is paying off its suppliers more frequently, which could indicate efficient working capital management or good negotiation terms with suppliers. On the other hand, a lower ratio may imply that the company is taking longer to pay its suppliers, potentially straining relationships or missing out on early payment discounts.
In the case of McCormick & Company, the payables turnover ratio has fluctuated but generally remained in a reasonable range, indicating a moderate level of efficiency in managing accounts payable. However, it would be beneficial to compare this ratio with industry peers to gain a better understanding of McCormick's performance in this area.