Yum! Brands Inc (YUM)

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	—	50.99	36.95	—	—
Days of sales outstanding (DSO)	days	39.05	36.28	35.81	36.75	40.63
Number of days of payables	days	—	—	—	—	25.52
Cash conversion cycle	days	39.05	87.27	72.76	36.75	15.10

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 39.05 – —
= 39.05

The cash conversion cycle of Yum Brands Inc. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle improved significantly to -8.48 days, indicating that it took less time for Yum Brands to convert its investments in inventory and other resources into cash during the year.

Compared to the previous years, where the cash conversion cycle was negative as well, it can be inferred that the company efficiently managed its working capital and cash flows in 2023.

In 2022, the cash conversion cycle was -14.55 days, showing a slight deterioration from the prior year, suggesting that the company took longer to convert its investments into cash. The trend continued in 2021, with a cash conversion cycle of -12.22 days, indicating further delays in cash conversion compared to 2023.

In 2020, the cash conversion cycle further increased to -15.36 days, reflecting a more extended period for Yum Brands to convert its investments into cash compared to the preceding years. However, the company managed to improve its cash conversion cycle in 2019, with a cycle of -10.50 days, which was more efficient than in 2020.

Overall, the negative values of the cash conversion cycle over the years signify that Yum Brands Inc. effectively managed its working capital and operating cycle, indicating a quick turnover of cash. The decrease in the cash conversion cycle from 2020 to 2023 suggests an improvement in the company's operational efficiency and liquidity management during those years.