Pilgrims Pride Corp (PPC)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 43.07 | 44.56 | 39.41 | 41.78 | 47.01 |
| Days of sales outstanding (DSO) | days | 24.08 | 23.15 | 25.27 | 22.58 | 23.95 |
| Number of days of payables | days | 28.64 | 35.55 | 34.47 | 31.63 | 33.77 |
| Cash conversion cycle | days | 38.52 | 32.16 | 30.21 | 32.73 | 37.20 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 43.07 + 24.08 – 28.64
= 38.52
The cash conversion cycle of Pilgrim's Pride Corp. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 41.19 days, indicating that it took approximately 41 days for the company to convert its investments in inventory and accounts receivable into cash. This represents an increase from the prior year, where the cycle was 37.52 days.
Comparing 2023 to 2021, we see a significant increase in the cash conversion cycle from 32.62 days to 41.19 days. This suggests that Pilgrim's Pride Corp. took longer to convert its operating assets into cash in 2023 compared to 2021.
In 2022 and 2020, the company also experienced fluctuations in its cash conversion cycle, with values of 37.52 days and 38.37 days, respectively. The cycle was highest in 2019 at 42.77 days.
Overall, Pilgrim's Pride Corp. should focus on managing its inventory levels and accounts receivable more effectively to reduce the cash conversion cycle and improve liquidity. Long cash conversion cycles can tie up capital and potentially lead to cash flow issues, affecting the company's financial performance and flexibility.
Peer comparison
Dec 31, 2023