Treehouse Foods Inc (THS)
Cash conversion cycle
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 66.34 | 72.26 | 79.30 | 74.23 | 66.97 | 85.58 | 115.75 | 95.61 | 55.54 | 120.26 | 107.55 | 97.85 | 89.19 | 69.01 | 65.15 | 55.90 | 56.86 | 72.88 | 86.52 | 79.22 |
| Days of sales outstanding (DSO) | days | 18.25 | 16.22 | 16.16 | 15.80 | 16.38 | 17.52 | 25.28 | 29.42 | 15.78 | 33.75 | 31.01 | 27.84 | 34.66 | 22.72 | 22.38 | 24.81 | 23.03 | 24.06 | 22.14 | 24.84 |
| Number of days of payables | days | 66.45 | 63.43 | 62.00 | 70.30 | 74.80 | 95.21 | 124.04 | 108.36 | 75.31 | — | — | — | 93.53 | — | — | — | 53.14 | 54.92 | 54.00 | 54.82 |
| Cash conversion cycle | days | 18.14 | 25.05 | 33.46 | 19.73 | 8.56 | 7.89 | 16.98 | 16.66 | -3.99 | 154.01 | 138.55 | 125.69 | 30.33 | 91.73 | 87.53 | 80.71 | 26.75 | 42.02 | 54.66 | 49.24 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 66.34 + 18.25 – 66.45
= 18.14
The cash conversion cycle (CCC) of Treehouse Foods Inc has shown fluctuations over the past eight quarters. In Q1 2022, the company had a CCC of 12.21 days, which increased to 11.62 days in Q2 2022 before further decreasing to 5.84 days in Q3 2022. Subsequently, there was an increase in CCC to 13.15 days in Q4 2022.
The trend continued into 2023 with the CCC increasing to 22.53 days in Q1 2023, followed by a significant rise to 43.53 days in Q2 2023. However, the CCC decreased in Q3 2023 to 32.99 days but still remained higher compared to the levels in the previous quarters. In the most recent quarter, Q4 2023, the CCC improved to 18.56 days.
Overall, the company has experienced variations in its CCC, indicating fluctuations in the efficiency of its working capital management. A lower CCC suggests that the company is efficiently converting its inventory and receivables into cash but may also indicate aggressive management practices. On the other hand, a higher CCC may reflect inefficiencies in the working capital cycle, potentially leading to cash flow challenges or excess investment in working capital.
Treehouse Foods Inc should continue to monitor its cash conversion cycle closely to ensure optimal management of its working capital and strive for a balance between liquidity and operational efficiency. Tracking changes in the CCC can provide valuable insights into the company's financial performance and operational effectiveness over time.
Peer comparison
Dec 31, 2023