J & J Snack Foods Corp (JJSF)
Cash conversion cycle
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 49.01 | 48.80 | 56.66 | 46.42 | 50.74 |
| Days of sales outstanding (DSO) | days | 43.86 | 46.39 | 55.04 | 51.96 | 45.21 |
| Number of days of payables | days | 25.27 | 25.82 | 33.96 | 36.48 | 34.07 |
| Cash conversion cycle | days | 67.60 | 69.37 | 77.74 | 61.90 | 61.88 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 49.01 + 43.86 – 25.27
= 67.60
The cash conversion cycle of J & J Snack Foods Corp has fluctuated over the past five years, with a range from 61.88 days in 2020 to 77.74 days in 2022. The trend shows an increase in the cash conversion cycle from 2020 to 2022, followed by a decrease in 2023 and 2024.
A shorter cash conversion cycle indicates that the company is able to convert its investments in inventory into cash more quickly, which can be seen as a positive indicator of operational efficiency. Conversely, a longer cash conversion cycle may suggest slower inventory turnover and collection of accounts receivable, potentially leading to liquidity challenges.
Overall, the recent improvement in the cash conversion cycle from 2022 to 2024 is a positive sign, indicating that J & J Snack Foods Corp has managed its working capital better and is operating more efficiently in terms of inventory management and cash flow conversion. It is important for the company to continue monitoring and managing its cash conversion cycle to ensure optimal working capital management and financial performance.