Treehouse Foods Inc (THS)
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 | 68.26 | 72.88 | 67.96 | 89.19 | 56.86 |
| Days of sales outstanding (DSO) | days | 18.68 | 16.78 | 18.75 | 37.64 | 23.03 |
| Number of days of payables | days | 68.37 | 81.39 | 92.15 | 93.53 | 53.14 |
| Cash conversion cycle | days | 18.56 | 8.27 | -5.44 | 33.31 | 26.75 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 68.26 + 18.68 – 68.37
= 18.56
Treehouse Foods Inc's cash conversion cycle has exhibited fluctuations over the past five years. In 2019, the company's cash conversion cycle stood at 26.75 days, indicating a relatively longer period required to convert its investments in inventory and accounts receivable into cash. Subsequently, there was a notable improvement in 2020, with the cycle decreasing to 22.92 days. This reduction suggests a more efficient management of working capital during that year.
However, in 2021, the cash conversion cycle saw a significant improvement, declining to 6.76 days, reflecting a notable enhancement in the company's ability to convert its resources into cash quickly. This improvement could be attributed to more effective inventory and receivables management practices.
The trend continued in 2022, with the cash conversion cycle further decreasing to 13.15 days, indicating sustained efficiency in working capital management. However, in 2023, there was a slight increase in the cash conversion cycle to 18.56 days, which may suggest a potential slowdown in the company's cash conversion processes compared to the previous year.
Overall, Treehouse Foods Inc has shown varying trends in its cash conversion cycle over the past five years. Efforts to shorten the cycle, particularly through more efficient inventory and accounts receivable management, have been evident in some years, while slight fluctuations in others may warrant continued monitoring to ensure optimal working capital utilization.
Peer comparison
Dec 31, 2023