McCormick & Company Incorporated (MKC)
Cash conversion cycle
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 98.85 | 120.00 | 112.87 | 114.18 | 91.33 |
| Days of sales outstanding (DSO) | days | 32.19 | 32.97 | 31.75 | 34.44 | 34.33 |
| Number of days of payables | days | 98.21 | 104.86 | 101.60 | 114.15 | 96.54 |
| Cash conversion cycle | days | 32.82 | 48.12 | 43.02 | 34.47 | 29.12 |
November 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 98.85 + 32.19 – 98.21
= 32.82
The cash conversion cycle of McCormick & Co., Inc. has fluctuated over the past five years. In 2019, the company had a relatively low cash conversion cycle of 29.12 days, indicating an efficient management of working capital. However, there was an increase in the cash conversion cycle to 34.47 days in 2020, which might suggest potential challenges in managing cash flow and the timing of inventory turnover and receivables collection.
In 2021, the cash conversion cycle further increased to 43.02 days, indicating an extended period of time for the company to convert its resource investments into cash inflows. This trend continued into the following year, with the cash conversion cycle peaking at 48.12 days in 2022, which could potentially signal inefficiencies in inventory management and collection of receivables.
The most recent data for 2023 shows an improvement in the cash conversion cycle to 32.82 days, indicating a more efficient working capital management compared to the prior year. This improvement suggests that the company may have taken steps to streamline its operations and strengthen its cash flow position.
Overall, the fluctuation in McCormick & Co., Inc.'s cash conversion cycle over the past five years highlights the importance of continuously monitoring working capital management and implementing strategies to optimize the timing of cash flows from operations.