CAVA Group, Inc. (CAVA)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	3.84	3.75	3.69	2.88	—
Days of sales outstanding (DSO)	days	4.92	5.95	5.00	4.42	0.16
Number of days of payables	days	12.93	11.47	10.27	11.03	13.10
Cash conversion cycle	days	-4.17	-1.77	-1.57	-3.73	-12.94

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 3.84 + 4.92 – 12.93
= -4.17

The cash conversion cycle (CCC) trends for CAVA Group, Inc. over the period from December 31, 2020, to December 31, 2024, demonstrate significant changes in the company's working capital management efficiency.

In 2020, the CCC was reported at -12.94 days, indicating that the company was able to generate cash from operations before accounting for the time it takes to pay suppliers and convert inventory into sales. This negative cycle suggests effective management of receivables and payables, facilitating a cash flow advantage.

By the end of 2021, the CCC had improved to -3.73 days, reflecting a reduction in the length of the cycle and a move closer to a neutral or slightly positive position. This indicates a modest increase in the time it takes to convert investments in inventory and receivables into cash, or a change in the payment cycle with suppliers.

The trend continued into 2022, with the CCC at -1.57 days. The near-zero negative value suggests the company's cash flow from operations is almost balanced with the timing of its cash outflows and inflows, signaling a stabilization period where operational efficiency is maintained with minimal lag.

In 2023, the CCC slightly declined to -1.77 days, maintaining a near-neutral position but exhibiting a minor lengthening of the cycle. This implies that operational processes remained stable, with slight adjustments possibly made to inventory or receivables management.

By the end of 2024, the CCC further decreased to -4.17 days, indicating a return to a more favorable position. The more negative value suggests enhanced efficiency in managing receivables and payables, enabling the company to generate cash more promptly relative to its inventory and receivables cycle.

Overall, the chronological progression of the CCC reveals that CAVA Group, Inc. has maintained a predominantly negative cash conversion cycle throughout these years, indicative of a cash-generative operational model. The fluctuations observed demonstrate efforts to optimize the timing of receivables and payables, with recent improvements suggesting a focus on enhancing cash flow performance.