McCormick & Company Incorporated (MKC)
Cash conversion cycle
| Nov 30, 2024 | Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 109.51 | 98.85 | 120.00 | 112.87 | 114.18 |
| Days of sales outstanding (DSO) | days | 31.89 | 32.19 | 32.97 | 31.75 | 34.44 |
| Number of days of payables | days | 109.35 | 98.21 | 104.86 | 101.60 | 114.15 |
| Cash conversion cycle | days | 32.05 | 32.82 | 48.12 | 43.02 | 34.47 |
November 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 109.51 + 31.89 – 109.35
= 32.05
The cash conversion cycle measures how efficiently a company manages its working capital by evaluating the time it takes to convert its resources into cash. Analyzing McCormick & Company Incorporated's data, we observe fluctuations in the cash conversion cycle over the years.
In November 2020, the company had a cash conversion cycle of 34.47 days, indicating a relatively efficient management of working capital. However, by November 2021, the cycle had extended to 43.02 days, suggesting a delay in converting resources to cash. This trend continued in November 2022 with a further increase to 48.12 days, indicating potential challenges in working capital management.
The situation improved by November 2023, as the cash conversion cycle decreased to 32.82 days, signaling a positive shift towards a more efficient working capital management. Moreover, in November 2024, the cycle decreased even further to 32.05 days, reflecting an enhanced ability to convert resources into cash quickly.
Overall, the fluctuations in McCormick & Company Incorporated's cash conversion cycle indicate varying degrees of efficiency in managing working capital over the analyzed period. It is essential for the company to focus on optimizing this cycle to ensure a healthy cash flow and sustainable financial performance.