Central Garden & Pet Company (CENT)
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 | 110.30 | 97.45 | 102.13 | 114.24 | 120.38 | 109.95 | 102.91 | 102.82 | 98.35 | 81.58 | 81.70 | 100.37 | 99.32 | 84.50 | 85.83 | 109.30 | 119.57 | 101.35 | 103.34 | 117.20 |
| Days of sales outstanding (DSO) | days | 40.83 | 36.71 | 55.06 | 63.25 | 36.35 | 41.19 | 54.60 | 66.42 | 37.00 | 42.57 | 56.65 | 77.56 | 42.48 | 53.05 | 71.75 | 69.15 | 40.73 | 45.97 | 61.58 | 72.51 |
| Number of days of payables | days | 24.68 | 22.19 | 23.41 | 26.62 | 22.82 | 25.28 | 28.11 | 34.41 | 28.50 | 29.23 | 30.91 | 41.61 | 37.49 | 39.45 | 36.02 | 39.49 | 39.68 | 32.45 | 30.60 | 35.71 |
| Cash conversion cycle | days | 126.45 | 111.97 | 133.78 | 150.87 | 133.91 | 125.86 | 129.40 | 134.83 | 106.85 | 94.92 | 107.44 | 136.32 | 104.32 | 98.10 | 121.56 | 138.96 | 120.62 | 114.87 | 134.33 | 154.00 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 110.30 + 40.83 – 24.68
= 126.45
The cash conversion cycle of Central Garden & Pet Company has varied over the last few quarters, indicating fluctuations in its efficiency in converting its investments in inventory and receivables into cash.
The company's cash conversion cycle peaked at 154.00 days in the fourth quarter of 2019, reflecting a longer period required to sell inventory and collect receivables before paying suppliers. This was likely due to inventory management issues or delays in collecting payments from customers.
There was a notable improvement in the first quarter of 2020, with the cash conversion cycle decreasing to 120.62 days, suggesting better inventory turnover and collection of receivables during that period.
However, the cycle increased again in subsequent quarters, reaching 150.87 days in the first quarter of 2023. This prolonged cycle could imply challenges in managing working capital efficiently, potentially affecting the company's liquidity and profitability.
Overall, Central Garden & Pet Company should focus on streamlining its operations, optimizing inventory management, and enhancing its receivables collection process to shorten the cash conversion cycle and improve its cash flow position.
Peer comparison
Dec 31, 2023