Tyson Foods Inc (TSN)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 38.70 | 43.18 | 39.47 | 37.26 | 38.36 |
| Days of sales outstanding (DSO) | days | 17.09 | 17.65 | 18.62 | 16.50 | 18.70 |
| Number of days of payables | days | 18.84 | 19.44 | 20.04 | 18.11 | 18.81 |
| Cash conversion cycle | days | 36.95 | 41.39 | 38.05 | 35.65 | 38.26 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 38.70 + 17.09 – 18.84
= 36.95
The cash conversion cycle (CCC) measures the time it takes for a company to convert its investments in raw materials and other resources into cash flows from sales. A lower CCC indicates that the company is more efficient in managing its working capital and converting inventory and receivables into cash.
Based on the data provided, Tyson Foods, Inc.'s CCC has fluctuated over the past five years. In 2023, the company's CCC improved to 36.95 days, representing a decrease compared to the previous year. This indicates that the company was able to more efficiently manage its working capital, convert inventory into sales, and collect receivables in a shorter time period.
In 2022, the CCC increased to 41.39 days, which suggests that Tyson Foods, Inc. took a longer time to convert its resources into cash compared to the previous year. This could be attributed to factors such as changes in inventory management or slower collection of receivables.
In 2021, the CCC was 38.05 days, showing a slight improvement from the previous year. The company appeared to have managed its working capital more effectively, resulting in a shorter cash conversion cycle.
In 2020, the CCC was 35.65 days, representing a decrease from the previous year. This indicates that Tyson Foods, Inc. was able to streamline its operations and enhance its working capital management.
In 2019, the CCC stood at 40.01 days, reflecting a longer cash conversion cycle compared to the subsequent years. This suggests that the company faced challenges in efficiently converting its investments into cash flows.
Overall, the fluctuation in Tyson Foods, Inc.'s CCC over the years reflects changing trends in its working capital management. While the company has experienced periods of improvement, there have also been instances of increased time required to convert investments into cash flows. This analysis highlights the importance of monitoring the CCC to assess the company's efficiency in managing its working capital and generating cash flows from its operating activities.
Peer comparison
Sep 30, 2023