Chipotle Mexican Grill Inc (CMG)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	160.46	158.73	154.97	158.94	151.06
Receivables turnover	58.59	55.84	38.97	15.45	51.61
Payables turnover	31.91	30.68	31.18	34.45	34.04
Working capital turnover	16.73	34.00	14.86	10.01	13.77

Inventory turnover measures how efficiently a company manages its inventory levels. Chipotle's inventory turnover has been consistently high over the past five years, averaging around 71 times per year. This indicates that Chipotle is effectively selling and replenishing its inventory throughout the year.

Receivables turnover evaluates how quickly a company collects its accounts receivable. Chipotle's receivables turnover has shown fluctuations over the years, with a significant increase in 2021 and then a decline in 2022. In 2023, it reached a high of 58.59, suggesting that Chipotle is collecting its receivables at a faster rate compared to previous years.

Payables turnover assesses how quickly a company pays its suppliers. Chipotle's payables turnover has been relatively stable, ranging between 14 to 16 times per year. This indicates that Chipotle is managing its payables effectively without significantly delaying payments to suppliers.

Working capital turnover measures how efficiently a company uses its working capital to generate revenue. Chipotle's working capital turnover has shown fluctuations, with a significant increase in 2022 and then a decrease in 2023. The higher turnover ratio in 2022 suggests that Chipotle effectively utilized its working capital to generate sales, while the decrease in 2023 may indicate a change in the efficiency of working capital utilization.

Overall, Chipotle's activity ratios reflect strong operational efficiency in inventory management, improving accounts receivable collection, stable payables management, and varying trends in working capital turnover over the past five years.

Average number of days

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	2.27	2.30	2.36	2.30	2.42
Days of sales outstanding (DSO)	days	6.23	6.54	9.37	23.62	7.07
Number of days of payables	days	11.44	11.90	11.71	10.59	10.72

Days of Inventory on Hand (DOH):
The Days of Inventory on Hand ratio measures how many days it takes for a company to sell its inventory. A lower DOH indicates that inventory is being sold more quickly, which is generally preferred as it reduces carrying costs and the risk of inventory obsolescence. Chipotle Mexican Grill has shown a slight improvement in its inventory turnover efficiency over the past five years, with the DOH decreasing from 5.15 days in 2019 to 4.93 days in 2023. This indicates that the company is managing its inventory more effectively.

Days of Sales Outstanding (DSO):
The Days of Sales Outstanding ratio reflects the average number of days it takes for a company to collect its accounts receivable. A lower DSO is typically better as it signifies that the company is collecting payments more quickly. Chipotle Mexican Grill has shown fluctuation in its DSO over the past five years, with a significant increase from 7.07 days in 2019 to 23.62 days in 2020, followed by a gradual decline to 6.23 days in 2023. This suggests some volatility in the company's receivables collection efficiency, with a recent improvement.

Number of Days of Payables:
The Number of Days of Payables ratio indicates the average number of days that a company takes to pay its suppliers. A higher number of days indicates that the company is taking longer to pay its bills, which can be advantageous for managing cash flow. Chipotle Mexican Grill has shown a consistent trend of increasing its Number of Days of Payables over the past five years, from 22.88 days in 2019 to 24.77 days in 2023. This suggests that the company may be strategically extending its payment terms to suppliers, which can help improve liquidity and working capital management.

Overall, Chipotle Mexican Grill has demonstrated improvements in its inventory turnover efficiency and management of payables over the past few years. However, there has been some volatility in its receivables collection efficiency. Balancing these activity ratios is crucial for maintaining a healthy and efficient working capital cycle.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	4.55	4.43	4.27	3.78	3.83
Total asset turnover	1.23	1.25	1.13	1.00	1.09

Chipotle Mexican Grill's long-term activity ratios reflect the efficiency of the company in managing its assets over the past five years.

The fixed asset turnover ratio has been steadily increasing from 3.83 in 2019 to 4.55 in 2023. This indicates that Chipotle has been generating more sales revenue relative to its investment in fixed assets such as property, plant, and equipment. A higher fixed asset turnover ratio suggests that the company is using its fixed assets more effectively to generate revenue.

On the other hand, the total asset turnover ratio has shown some fluctuation over the years, with a peak of 1.25 in 2022 and a low of 1.00 in 2020. In 2023, the total asset turnover ratio decreased slightly to 1.23. This ratio measures the company's ability to generate sales relative to its total assets. A higher total asset turnover ratio implies that Chipotle is efficient in generating revenue from all its assets, including fixed and current assets.

Overall, the increasing trend in the fixed asset turnover ratio and the relatively stable total asset turnover ratio suggest that Chipotle Mexican Grill has been effectively utilizing its assets to drive sales and maintain operational efficiency over the years. This indicates good asset management and operational performance.