McCormick & Company Incorporated (MKC)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	99.10	98.85	107.02	112.34	119.22	120.00	124.88	124.15	117.01	112.87	118.84	116.92	113.14	114.18	105.53	94.59	95.92	91.33	96.29	92.65
Days of sales outstanding (DSO)	days	30.92	32.19	34.51	31.21	32.60	32.97	32.34	28.39	29.66	31.75	32.13	30.31	32.07	34.44	32.78	33.24	28.08	34.33	33.87	29.44
Number of days of payables	days	99.42	98.21	96.06	96.83	99.69	104.86	103.51	104.01	100.87	101.60	101.12	105.99	101.97	114.15	101.13	97.54	90.62	96.54	89.04	80.18
Cash conversion cycle	days	30.59	32.82	45.48	46.72	52.13	48.12	53.71	48.54	45.80	43.02	49.85	41.24	43.25	34.47	37.18	30.30	33.38	29.12	41.12	41.91

February 29, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 99.10 + 30.92 – 99.42
= 30.59

The cash conversion cycle (CCC) of McCormick & Company Incorporated fluctuated over the past few periods. The CCC represents the number of days it takes for a company to convert its resources invested in inventory into cash received from sales.

Analyzing the trend in McCormick's CCC, we observe that it ranged from a low of 29.12 days to a high of 53.71 days during the periods under review. A lower CCC indicates that the company is able to quickly convert its inventory into cash, which is a positive sign of efficiency. Conversely, a higher CCC suggests potential inefficiencies in the company's operations or difficulties in managing working capital.

In the most recent period, as of February 29, 2024, the CCC stood at 30.59 days, representing a relatively efficient conversion of inventory into cash. This indicates that McCormick is managing its working capital effectively and has a shorter cash cycle, which can boost liquidity and financial performance.

It is essential for McCormick to continually monitor and manage its cash conversion cycle to optimize its working capital and ensure efficient operations. By analyzing and improving the components of the CCC, such as inventory turnover, accounts receivable collection, and accounts payable management, McCormick can enhance its financial health and performance in the long term.