Sally Beauty Holdings Inc (SBH)
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 | 110.05 | 104.47 | 97.45 | 91.84 | 91.07 |
| Days of sales outstanding (DSO) | days | 3.31 | 3.34 | 3.36 | 3.15 | 3.80 |
| Number of days of payables | days | 28.60 | 27.73 | 28.70 | 30.74 | 26.42 |
| Cash conversion cycle | days | 84.75 | 80.08 | 72.12 | 64.25 | 68.45 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 110.05 + 3.31 – 28.60
= 84.75
Sally Beauty Holdings Inc's cash conversion cycle has shown a fluctuating trend over the past five years. The cycle indicates the average number of days it takes for the company to convert its investments in inventory and other resources into cash received from sales. In 2024, the cash conversion cycle increased to 84.75 days compared to the previous year, suggesting a slower conversion of inventory and accounts receivable into cash. This may indicate potential challenges in managing working capital efficiently.
Compared to 2020, the cycle has increased significantly by 16.3 days in 2024. This increase may raise concerns about the company's liquidity and operational efficiency. Moreover, the cash conversion cycle has been progressively lengthening since 2020, indicating a prolonged time period to convert resources into cash.
Overall, it is important for Sally Beauty Holdings Inc to monitor and improve its cash conversion cycle, as a shorter cycle indicates more efficient working capital management and better liquidity. Additionally, the company should focus on strategies to streamline inventory turnover and accounts receivable collection processes to optimize cash flow and operational effectiveness.
Peer comparison
Sep 30, 2024