THE CONCEPT OF THE CASH CONVERSION CYCLE IN WORKING CAPITAL MANAGEMENT OF INTERNATIONAL COMPANIES

Abstract

The article investigates the specific features and modern approaches of working capital management among the largest international corporations operating in the fast-moving consumer goods market. The global consumer goods sector is characterized by massive production volumes, rapid inventory turnover, and relatively low operating margins, therefore it requires highly efficient financial management approaches focused primarily on cash flow optimization rather than simple markup maximization. Based on a comprehensive empirical analysis of 46 leading public companies selected from the S&P Global 1200 Consumer Staples index, the study explores how market leaders structurally organize their liquidity. The research confirms that for global industry giants that are maintaining negative working capital and a negative cash conversion cycle is not an indicator of financial distress or inadequate liquidity management, but rather an intentional, highly efficient operational strategy. This strategy relies heavily on maximizing trade credit and extending terms of payments for accounts payable. The paper also highlights significant strategic differentiation based on sub-industry specifics and geographical origin. Western food and beverage corporations often pursue aggressive liquidity minimization, companies dealing with premium cosmetics or volatile raw materials (like the confectionery sector) require longer inventory holding periods and, consequently, distinct financing models. Japanese corporations demonstrate a different, conservative corporate finance model, prioritizing high liquidity buffers to ensure absolute financial stability against macroeconomic shocks. A critical aspect of the study is the evaluation of how the digital transformation directly influences corporate financial strategies. The integration of advanced enterprise resource planning systems enables multinational companies to manage inventory and cash flows in real-time, fundamentally altering traditional liquidity management frameworks. The deployment of digital tools such as reverse factoring platforms, automated predictive inventory planning  via IoT, and deep data integration with suppliers serves as a primary catalyst for reducing the cash conversion cycle. Consequently, the ability to establish adaptive supply chains and seamlessly embed fintech solutions into daily operations remains the defining factor for sustaining financial competitiveness in the global consumer goods sector.