Chipotle Mexican Grill Inc (CMG)

Payables turnover

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Cost of revenue (ttm)	US$ in thousands	7,196,630	6,943,640	6,774,190	6,526,000	6,307,620	6,079,540	5,932,160	5,776,500	5,661,730	5,594,990	5,466,140	5,286,610	5,087,090	4,770,890	4,586,510	4,354,293	4,203,080	2,992,195	2,889,492	2,925,562
Payables	US$ in thousands	210,695	221,301	203,480	196,866	197,646	207,541	162,041	182,606	184,566	167,842	158,581	168,905	163,161	171,712	140,251	147,417	121,990	157,324	160,523	130,423
Payables turnover		34.16	31.38	33.29	33.15	31.91	29.29	36.61	31.63	30.68	33.33	34.47	31.30	31.18	27.78	32.70	29.54	34.45	19.02	18.00	22.43

December 31, 2024 calculation

Payables turnover = Cost of revenue (ttm) ÷ Payables
= $7,196,630K ÷ $210,695K
= 34.16

The payables turnover ratio measures how efficiently Chipotle Mexican Grill Inc is managing its accounts payable by indicating how many times the company pays off its suppliers during a specific period.

Analyzing the data provided, we observe fluctuations in the payables turnover ratio for Chipotle over the period from March 31, 2020, to December 31, 2024. The payables turnover ratio ranged from a low of 18.00 in June 30, 2020, to a high of 36.61 in June 30, 2023, showing some variability over time.

Overall, the trend indicates that Chipotle's payables turnover ratio generally increased over the years, reflecting potential improvements in the company's ability to efficiently manage its accounts payable and pay off its suppliers. This upward trend suggests that Chipotle has been paying its suppliers more frequently in recent years, which can be beneficial in maintaining good supplier relationships and managing working capital effectively.

The higher payables turnover ratio signifies that Chipotle is efficiently utilizing its suppliers' credit terms, effectively leveraging its cash flow for operations, and potentially negotiating favorable terms with suppliers. However, a very high ratio may also indicate that the company is not taking advantage of the credit terms offered by suppliers to the fullest extent.

In conclusion, the increasing trend in Chipotle's payables turnover ratio from 2020 to 2024 suggests an improvement in the company's efficiency in managing its accounts payable, which is a positive indicator for its financial health and operational effectiveness.