Calavo Growers Inc (CVGW)
Cash conversion cycle
| Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | Apr 30, 2020 | Jan 31, 2020 | Oct 31, 2019 | Jul 31, 2019 | Apr 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 16.45 | 11.79 | 14.57 | 14.72 | 14.11 | 11.92 | 10.64 | 16.49 | 16.95 | 13.92 | 17.27 | 19.40 | 15.08 | 14.30 | 14.30 | 14.65 | 13.29 | 11.94 | 15.13 | 17.13 |
| Days of sales outstanding (DSO) | days | 15.14 | 25.72 | 30.10 | 25.26 | 21.19 | 19.59 | 26.04 | 35.07 | 32.10 | 29.07 | 31.03 | 34.90 | 29.47 | 24.76 | 26.11 | 25.80 | 24.86 | 20.95 | 27.20 | 27.12 |
| Number of days of payables | days | 2.04 | 5.80 | 6.15 | 6.59 | 5.58 | 3.20 | 3.41 | 5.73 | 3.83 | 3.35 | 3.79 | 5.10 | 5.21 | 3.21 | 3.46 | 2.36 | 6.88 | 5.64 | 5.02 | 4.80 |
| Cash conversion cycle | days | 29.55 | 31.71 | 38.51 | 33.39 | 29.73 | 28.31 | 33.27 | 45.83 | 45.22 | 39.65 | 44.50 | 49.20 | 39.34 | 35.85 | 36.95 | 38.09 | 31.26 | 27.25 | 37.31 | 39.45 |
January 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 16.45 + 15.14 – 2.04
= 29.55
The cash conversion cycle of Calavo Growers Inc has shown some fluctuations over the past few quarters. The cycle measures how long it takes for a company to convert its investment in inventory or raw materials into cash received from sales.
Analyzing the data provided:
- The company's cash conversion cycle ranged from a low of 27.25 days in October 2019 to a high of 49.20 days in January 2021.
- Generally, the cycle has been hovering between 27 to 49 days over the past few years, indicating the company's operational efficiency in managing its working capital.
In general, a shorter cash conversion cycle is preferred as it signifies a more efficient use of resources and quicker recovery of cash invested in the business. Fluctuations in the cash conversion cycle may be influenced by factors such as inventory management, accounts receivable collection, and accounts payable terms.
It would be beneficial for Calavo Growers Inc to monitor and analyze the components of the cash conversion cycle to identify areas of improvement and strive for a more consistent and optimized cycle going forward.