Freshpet Inc (FRPT)

Days of sales outstanding (DSO)

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Receivables turnover 14.25 13.51 10.34 12.23 17.29
DSO days 25.61 27.01 35.30 29.84 21.11

December 31, 2024 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 14.25
= 25.61

The analysis of Freshpet Inc's days of sales outstanding (DSO) over the specified period reveals notable fluctuations that reflect changes in the company's accounts receivable collection efficiency. As of December 31, 2020, the DSO was approximately 21.11 days, indicating a relatively prompt collection of receivables shortly after sales. This figure increased significantly to around 29.84 days by December 31, 2021, signifying a slower collection process or potential shifts in credit terms or customer payment behaviors.

The upward trend continued into 2022, with the DSO reaching approximately 35.30 days, suggesting further elongation in receivables turnover. Such an increase could impact the company's liquidity position, as funds tied up in receivables remain longer before realization. However, in the subsequent year, there was a notable improvement; by December 31, 2023, the DSO decreased to approximately 27.01 days, reflecting an enhancement in accounts receivable management or a change in credit policies.

This downward trend persisted into 2024, with the DSO further reducing to about 25.61 days. The reduction in DSO indicates that Freshpet Inc managed to accelerate its collection process relative to the previous year, thereby improving cash flow. Overall, while the company experienced periods of increased receivables collection periods, recent data suggest a positive trend towards shorter DSO, which may be indicative of improved operational efficiency or tighter credit controls. Nonetheless, the DSO remained higher than the levels seen in 2020, implying continued room for optimizing receivables management strategies.