Sally Beauty Holdings Inc (SBH)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 104.47 | 97.45 | 91.84 | 91.07 | 101.43 |
| Days of sales outstanding (DSO) | days | 3.34 | 3.36 | 3.15 | 3.80 | 4.17 |
| Number of days of payables | days | 27.73 | 28.70 | 30.74 | 26.42 | 29.66 |
| Cash conversion cycle | days | 80.08 | 72.12 | 64.25 | 68.45 | 75.93 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 104.47 + 3.34 – 27.73
= 80.08
The cash conversion cycle (CCC) of Sally Beauty Holdings Inc has shown fluctuating trends over the past five years, indicating the company's effectiveness in managing its cash flow. In 2023, the CCC increased to 150.31 days from 134.07 days in 2022, reflecting a potential deterioration in the company's ability to convert its investments in inventory and receivables into cash.
Comparing to the previous years, the CCC was 116.38 days in 2021, 123.18 days in 2020, and 135.02 days in 2019. The rising trend from 2020 to 2022 was interrupted, as the CCC decreased significantly in 2021 and then increased again in 2023. This might be an indication of challenges in managing the company's working capital efficiently.
A longer cash conversion cycle suggests that the company takes more time to sell its inventory and collect receivables, which could potentially lead to increased carrying costs and liquidity strain. Investors and stakeholders should closely monitor this trend to assess the company's cash flow management and operational efficiency.
Peer comparison
Sep 30, 2023