Leslies Inc (LESL)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | ||
|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 82.29 | 97.49 | 62.53 |
| Days of sales outstanding (DSO) | days | 9.30 | 11.88 | 12.21 |
| Number of days of payables | days | 15.45 | 42.17 | 31.76 |
| Cash conversion cycle | days | 76.13 | 67.20 | 42.99 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 82.29 + 9.30 – 15.45
= 76.13
The cash conversion cycle for Leslies Inc has shown an increasing trend over the past three years. As of September 30, 2023, the company's cash conversion cycle increased to 76.13 days compared to 67.20 days in 2022 and 42.99 days in 2021.
This indicates that it is taking longer for Leslies Inc to convert its investments in inventory back into cash. A longer cash conversion cycle may suggest inefficiencies in the company's operations, such as slower inventory turnover or longer collection periods for accounts receivable.
Management should closely monitor and analyze the components of the cash conversion cycle, such as inventory turnover, accounts receivable collection period, and accounts payable payment period, to identify areas for improvement and work towards optimizing the company's cash flow management.
Peer comparison
Sep 30, 2023