Central Garden & Pet Company A (CENTA)
Payables turnover
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 2,363,240 | 2,346,280 | 2,332,780 | 1,898,950 | 1,678,960 |
| Payables | US$ in thousands | 190,902 | 215,681 | 245,542 | 205,234 | 149,246 |
| Payables turnover | 12.38 | 10.88 | 9.50 | 9.25 | 11.25 |
September 30, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $2,363,240K ÷ $190,902K
= 12.38
The payables turnover ratio measures how efficiently a company manages its payables by comparing its cost of goods sold to its average accounts payable. Central Garden & Pet Co.'s payables turnover has exhibited a generally increasing trend over the past five years, indicating improvement in its ability to pay off its suppliers or creditors.
The higher payables turnover in 2023 of 12.38 compared to the previous years shows that the company is paying off its accounts payable at a faster rate, which is generally a positive sign. This may imply effective management of trade credit and possibly stronger negotiation power with suppliers. However, it's important to note that a very high payables turnover may also indicate aggressive tactics aimed at extending payment terms, which could strain supplier relationships.
Overall, Central Garden & Pet Co.'s increasing payables turnover suggests that the company has been effectively managing its accounts payable and working capital, which could contribute to improved financial stability and potentially lower financing costs. However, the company should continue to monitor this ratio to ensure that the acceleration in payables turnover is not negatively impacting supplier relationships or cash flow management.
Peer comparison
Sep 30, 2023