Cintas Corporation (CTAS)

Cash conversion cycle

		May 31, 2024	Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019	Aug 31, 2019
Days of inventory on hand (DOH)	days	53.91	60.45	65.59	70.62	73.36	78.46	79.12	75.17	77.57	80.69	77.41	78.59	82.96	79.62	66.95	52.39	38.75	32.95	33.02	32.28
Days of sales outstanding (DSO)	days	47.32	49.48	51.16	49.19	48.34	48.73	50.63	49.15	48.24	51.78	52.78	47.62	47.90	52.79	51.27	45.20	44.84	48.59	49.85	47.81
Number of days of payables	days	44.58	41.26	43.75	44.60	43.77	41.60	47.79	46.37	41.32	38.97	40.02	34.40	39.74	35.52	34.35	27.10	21.89	22.71	24.13	22.77
Cash conversion cycle	days	56.66	68.68	73.00	75.20	77.92	85.59	81.96	77.95	84.49	93.50	90.18	91.82	91.12	96.90	83.87	70.49	61.70	58.83	58.74	57.31

May 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 53.91 + 47.32 – 44.58
= 56.66

The cash conversion cycle of Cintas Corporation has shown some fluctuations over the past several periods. The cash conversion cycle represents the time it takes for a company to convert its investment in inventory into cash received from sales.

Analyzing the data provided, we observe that the cash conversion cycle has ranged from a low of 56.66 days to a high of 96.90 days over the past several reporting periods. A shorter cash conversion cycle indicates that the company is able to quickly turn its inventory into sales and collect cash, which is generally favorable.

In recent periods, the cash conversion cycle has shown a trend towards increasing, with peaks observed in May 2021, February 2022, and November 2022. This suggests that Cintas may be experiencing challenges in efficiently managing its inventory, collecting receivables, or both. On the other hand, the cycle decreased in some periods, such as in August 2020 and May 2020, indicating potential improvements in working capital management.

Overall, Cintas should focus on optimizing its inventory management and accounts receivable collection processes to reduce the cash conversion cycle. By effectively managing these aspects of its operations, the company can enhance its liquidity, working capital efficiency, and overall financial performance.