Central Garden & Pet Company A (CENTA)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 129.46 | 145.92 | 107.22 | 84.50 | 101.35 |
| Days of sales outstanding (DSO) | days | 36.71 | 41.19 | 42.58 | 53.05 | 45.97 |
| Number of days of payables | days | 29.48 | 33.55 | 38.42 | 39.45 | 32.45 |
| Cash conversion cycle | days | 136.68 | 153.56 | 111.38 | 98.10 | 114.88 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 129.46 + 36.71 – 29.48
= 136.68
The cash conversion cycle of Central Garden & Pet Co. has exhibited fluctuations over the past five years. In the fiscal year ending September 30, 2023, the company's cash conversion cycle was 136.68 days, representing a decrease from the previous year. This indicates that the company took 136.68 days on average to convert its investments in inventory and other resources into cash receipts from sales.
Comparing this to historical data, it is evident that the cash conversion cycle has fluctuated over the years. The increase in the cycle in fiscal year 2022 may signify potential challenges in managing the company's working capital efficiency. However, the decrease in the cycle in fiscal year 2023 is a positive sign, suggesting that the company may have improved its efficiency in managing inventory and collecting receivables, resulting in a quicker conversion of resources into cash.
Overall, a lower cash conversion cycle indicates that the company is able to efficiently manage its working capital and generate cash from its operating activities. However, it is important to monitor any significant fluctuations in the cash conversion cycle, as they may indicate changes in the company's operational and financial efficiency.
Peer comparison
Sep 30, 2023