Calavo Growers Inc (CVGW)
Cash conversion cycle
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 11.79 | 11.92 | 14.00 | 14.30 | 11.94 |
| Days of sales outstanding (DSO) | days | 25.71 | 19.60 | 28.90 | 24.77 | 20.95 |
| Number of days of payables | days | 5.80 | 3.20 | 3.36 | 3.21 | 5.64 |
| Cash conversion cycle | days | 31.70 | 28.32 | 39.53 | 35.85 | 27.25 |
October 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 11.79 + 25.71 – 5.80
= 31.70
To analyze the cash conversion cycle of Calavo Growers, Inc, we compare the data over the past five years. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash from sales.
The trend in Calavo's cash conversion cycle shows some variation over the years. In 2023 and 2022, the company's cash conversion cycle increased to 33.13 days and 28.40 days, respectively, from 42.57 days in 2021. This indicates that the company took longer to convert its investments into cash from sales.
However, it's worth noting that the cash conversion cycle improved in 2020 and 2019, decreasing to 37.79 days and 26.89 days, respectively. This improvement may suggest more efficient management of inventory and payment collection processes during those years.
Overall, fluctuations in the cash conversion cycle can be influenced by various factors such as inventory management, sales on credit, and the efficiency of the company's collection processes. Therefore, further analysis of the company's operational and financial activities is crucial to understand the drivers behind these changes in the cash conversion cycle.