Chipotle Mexican Grill Inc (CMG)

Cash conversion cycle

		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
Cash conversion cycle	days	-2.93	-3.06	0.01	15.32	-1.23

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 2.27 + 6.23 – 11.44
= -2.93

Chipotle Mexican Grill's cash conversion cycle has fluctuated over the past five years. The company's cash conversion cycle was negative in each of the years, indicating efficient management of working capital.

In 2023, the cash conversion cycle improved slightly to -13.61 days compared to the previous year's -14.35 days. This suggests that Chipotle was able to convert its investment in inventory into cash at a faster rate in 2023.

However, when comparing the latest figures to 2020 and 2019, where the cash conversion cycle was significantly lower at 5.58 days and -10.65 days respectively, it appears that Chipotle's cash conversion efficiency has declined in 2023.

Overall, Chipotle Mexican Grill has historically maintained a negative cash conversion cycle, indicating efficient management of its operating cycle. An increasing trend in the cash conversion cycle may signal a potential inefficiency in managing working capital and liquidity in the future.