Freshpet Inc (FRPT)

Payables turnover

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cost of revenue US$ in thousands 579,221 516,023 409,311 263,343 185,880
Payables US$ in thousands 39,164 36,096 55,088 42,612 16,452
Payables turnover 14.79 14.30 7.43 6.18 11.30

December 31, 2024 calculation

Payables turnover = Cost of revenue ÷ Payables
= $579,221K ÷ $39,164K
= 14.79

The payables turnover ratio for Freshpet Inc. has exhibited notable fluctuations over the analyzed period from December 31, 2020, to December 31, 2024. In 2020, the ratio stood at 11.30, indicating that the company was paying its accounts payable approximately 11.3 times during the year. This relatively high turnover suggests a prompt payment cycle to suppliers during that year.

However, in 2021, the ratio declined significantly to 6.18, implying that the company’s payment frequency decreased, potentially reflecting extended payment terms or delayed payments to suppliers. This reduction in turnover could suggest strategic payment stretching, cash flow considerations, or supply chain factors impacting vendor payment schedules.

By 2022, the ratio experienced an increase to 7.43, indicating a moderate improvement in payables management but still remaining below the 2020 levels. This suggests a partial normalization of payment patterns, though the company continued to pay its suppliers less frequently than in 2020.

The most substantial shifts occurred in 2023 and 2024, where the payables turnover ratio rose sharply to 14.30 and 14.79, respectively. These levels represent a significant acceleration in the payment cycle compared to previous years, surpassing even the 2020 figures. Such a steady increase indicates that Freshpet Inc. has adopted a more aggressive approach to paying its suppliers, minimizing the accounts payable balance relative to its cost of goods sold. This could be a result of improved liquidity, strategic supplier payment policies, or operational enhancements that enable faster payment processes.

Overall, the trend demonstrates a marked transition from a period of extended payments in 2021 to a more aggressive payment cycle in subsequent years, culminating in the highest turnover ratios in 2023 and 2024. This evolution reflects changes in the company's liquidity management, operational priorities, or supply chain relationships.