McCormick & Company Incorporated (MKC)
Cash conversion cycle
| Nov 30, 2024 | Aug 31, 2024 | May 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 109.51 | 110.40 | 102.10 | 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 |
| Days of sales outstanding (DSO) | days | 31.89 | 36.12 | 32.69 | 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 |
| Number of days of payables | days | 109.35 | 109.08 | 106.69 | 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 |
| Cash conversion cycle | days | 32.05 | 37.44 | 28.09 | 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 |
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 of McCormick & Company Incorporated shows fluctuations over the periods analyzed. It measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle indicates more efficient management of working capital.
From February 2020 to August 2021, the cash conversion cycle ranged between 30 to 49 days, with some fluctuations. Higher values suggest that the company takes longer to collect cash from sales or turns over inventory at a slower rate. The peak observed in August 2021 could indicate challenges in managing working capital efficiently.
Subsequently, the cash conversion cycle decreased to around 28-37 days from May 2024 to August 2024, suggesting improvements in the company's management of inventory, accounts receivable, and accounts payable during these periods. These improvements can lead to better cash flow management and potentially improved profitability.
Overall, monitoring the trends in the cash conversion cycle can provide insights into McCormick & Company's working capital management efficiency and financial performance over time.