Freshpet Inc (FRPT)

Cash conversion cycle

		Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020
Days of inventory on hand (DOH)	days	49.25	50.36	45.82	47.48	48.49	44.34	43.53	50.93	55.34	52.13	64.75	68.80	56.32	49.31	44.08	40.05	38.92	37.54	38.18	44.19
Days of sales outstanding (DSO)	days	22.54	25.61	25.57	28.43	30.37	27.01	27.69	28.35	28.65	35.30	32.28	45.18	48.32	29.84	29.83	33.44	30.75	21.11	26.33	29.41
Number of days of payables	days	25.68	24.41	22.33	22.07	31.43	25.31	30.15	25.27	22.02	49.27	37.29	44.80	95.89	59.06	19.29	63.77	55.20	32.31	23.43	21.49
Cash conversion cycle	days	46.11	51.56	49.06	53.84	47.43	46.04	41.07	54.01	61.97	38.16	59.75	69.18	8.74	20.08	54.62	9.72	14.46	26.35	41.09	52.11

March 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 49.25 + 22.54 – 25.68
= 46.11

The cash conversion cycle (CCC) of Freshpet Inc. exhibits notable fluctuations over the provided period, reflecting the company's evolving operational efficiency and liquidity management strategies. In 2020, the CCC demonstrated a declining trend, starting from approximately 52.11 days as of June 30 and decreasing steadily to 26.35 days by December 31, contributing to an overall improvement in working capital management during that year. The subsequent quarters initially sustained this positive trajectory, with the cycle narrowing to as low as 8.74 days in March 2022, indicating rapid collection of receivables and efficient inventory turnover.

However, this trend experienced variability thereafter. In mid-2022, the CCC increased significantly to 69.18 days by June 30, suggesting a slowdown in accounts receivable collections, longer inventory holding periods, or both. The latter part of 2022 saw a partial reduction to 38.16 days by December 31, but the cycle lengthened again into 2023, reaching approximately 61.97 days in March, then gradually decreasing to around 46.11 days by March 2025.

Throughout this timeline, periods of substantial reduction in the cash conversion cycle generally indicate improvements in cash flow efficiency, while increases suggest liquidity strains or shifts in operational processes affecting receivables, inventory management, or payables. The cyclical nature of these changes underscores the dynamic environment of Freshpet's operations, possibly influenced by seasonal factors, strategic adjustments, or market conditions impacting receivables collection and inventory turnover rates.

Overall, the data reflects a company that experienced notable periods of operational efficiency interspersed with phases of relative delays in cash conversion, pointing to ongoing adjustments in its working capital policies aimed at optimizing liquidity and operational agility.