Central Garden & Pet Company (CENT)
Cash conversion cycle
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 122.59 | 129.46 | 145.92 | 107.22 | 84.50 |
| Days of sales outstanding (DSO) | days | 37.20 | 36.71 | 41.19 | 42.58 | 53.05 |
| Number of days of payables | days | 34.39 | 29.48 | 33.55 | 38.42 | 39.45 |
| Cash conversion cycle | days | 125.41 | 136.68 | 153.56 | 111.38 | 98.10 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 122.59 + 37.20 – 34.39
= 125.41
The cash conversion cycle of Central Garden & Pet Company has shown variations over the five-year period from September 30, 2020, to September 30, 2024.
The company's cash conversion cycle measures how long it takes for Central Garden & Pet to convert its investments in inventory into cash flows from sales. A shorter cash conversion cycle is favorable as it indicates that the company is efficiently managing its working capital.
From 2020 to 2021, there was a significant improvement in the cash conversion cycle, decreasing from 98.10 days to 111.38 days. This reduction suggests that Central Garden & Pet improved its inventory management and payment collection processes during this period.
However, from 2021 to 2022, there was a notable increase in the cash conversion cycle, rising to 153.56 days. This uptrend indicates that Central Garden & Pet may have experienced challenges in managing its working capital effectively, potentially due to inventory management issues or delays in collecting receivables.
In the subsequent years, the cash conversion cycle decreased, reaching 125.41 days by September 30, 2024. Although it is still higher compared to some previous years, this reduction indicates that Central Garden & Pet made improvements in managing its working capital efficiency.
Overall, the analysis of Central Garden & Pet Company's cash conversion cycle highlights the company's varying performance in efficiently converting its investments in inventory into cash flows over the five-year period, with fluctuations that may be influenced by factors such as inventory management, sales practices, and payment collection processes.
Peer comparison
Sep 30, 2024