The Chefs Warehouse Inc (CHEF)
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 | 31.17 | 30.91 | 35.36 | 30.04 | 24.18 |
| Days of sales outstanding (DSO) | days | 35.23 | 35.96 | 37.14 | 36.44 | 32.26 |
| Number of days of payables | days | 26.31 | 21.79 | 23.51 | 24.59 | 16.85 |
| Cash conversion cycle | days | 40.09 | 45.08 | 48.99 | 41.89 | 39.58 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 31.17 + 35.23 – 26.31
= 40.09
The cash conversion cycle of The Chefs Warehouse Inc has shown fluctuations over the years according to the data provided. From December 31, 2020, at 39.58 days, the cycle increased to 41.89 days by December 31, 2021, and further to 48.99 days by December 31, 2022. However, by December 31, 2023, there was a slight decrease to 45.08 days, followed by a reduction to 40.09 days by December 31, 2024.
These fluctuations in the cash conversion cycle indicate changes in the company's efficiency in managing its cash flows and working capital. A shorter cash conversion cycle implies that the company is able to convert its investments in inventory into cash quickly, reflecting effective inventory management and collection processes. Conversely, a longer cycle may indicate inefficiencies in operations or challenges in collecting receivables.
Overall, The Chefs Warehouse Inc should continue to monitor and manage its cash conversion cycle to ensure optimal utilization of resources and enhance its overall financial performance.
Peer comparison
Dec 31, 2024