Yum! Brands Inc (YUM)
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 | — | — | — | — | 50.99 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 39.05 | 33.45 | 34.25 | 32.71 | 36.28 | 31.48 | 32.68 | 31.03 | 35.81 | 31.07 | 30.52 | 31.56 | 36.75 | 34.00 | 35.21 | 33.27 | 40.63 | 35.22 | 35.42 | 35.58 |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 25.53 | — | — | — |
| Cash conversion cycle | days | 39.05 | 33.45 | 34.25 | 32.71 | 87.27 | 31.48 | 32.68 | 31.03 | 35.81 | 31.07 | 30.52 | 31.56 | 36.75 | 34.00 | 35.21 | 33.27 | 15.09 | 35.22 | 35.42 | 35.58 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 39.05 – —
= 39.05
The cash conversion cycle is a measure used to evaluate how efficiently a company manages its working capital. It represents the time it takes for a company to convert its investment in inventory into cash received from customers. A shorter cash conversion cycle is generally preferred as it indicates faster cash flows and better liquidity.
In the case of Yum Brands Inc., the cash conversion cycle has varied over the past eight quarters. In Q4 2023 and Q4 2022, the company had negative cash conversion cycle values, indicating that it was able to collect cash from customers before paying its suppliers and vendors. This suggests effective management of working capital during those periods.
However, in the other quarters, the cash conversion cycle was positive, ranging from 31.03 days to 34.25 days. This means that the company took between approximately one month to slightly over a month to convert its inventory into cash. While these values are not exceptionally high, they do indicate that Yum Brands Inc. could improve its working capital management to shorten the cycle further.
It is worth noting that the fluctuation in the cash conversion cycle may be influenced by various factors such as seasonal demand, payment terms with suppliers, and operational efficiency. Continuous monitoring and optimization of the cash conversion cycle can help Yum Brands Inc. enhance its liquidity position and overall financial performance.
Peer comparison
Dec 31, 2023