Sally Beauty Holdings Inc (SBH)
Cash conversion cycle
| 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 | Mar 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 110.07 | 108.87 | 111.69 | 108.28 | 104.47 | 103.53 | 105.72 | 102.56 | 97.45 | 107.71 | 101.20 | 104.95 | 91.84 | 99.75 | 107.25 | 101.89 | 91.13 | 90.91 | 100.85 | 105.35 |
| Days of sales outstanding (DSO) | days | 3.30 | 3.30 | 3.50 | 3.24 | 3.34 | 3.25 | 3.00 | 3.22 | 3.34 | 3.06 | 2.73 | 2.82 | 3.15 | 4.33 | 4.16 | 4.31 | 3.77 | 4.53 | 4.20 | 3.96 |
| Number of days of payables | days | 28.61 | 24.98 | 31.11 | 28.74 | 27.73 | 25.35 | 27.37 | 30.78 | 28.70 | 29.66 | 25.30 | 36.13 | 30.74 | 28.67 | 35.03 | 32.48 | 26.44 | 26.74 | 23.64 | 28.90 |
| Cash conversion cycle | days | 84.77 | 87.19 | 84.08 | 82.77 | 80.08 | 81.43 | 81.34 | 75.00 | 72.10 | 81.12 | 78.64 | 71.63 | 64.25 | 75.41 | 76.38 | 73.71 | 68.46 | 68.70 | 81.41 | 80.40 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 110.07 + 3.30 – 28.61
= 84.77
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flow from sales. Sally Beauty Holdings Inc's cash conversion cycle has shown fluctuating trends over the past few quarters, ranging from 64.25 days to 87.19 days.
The company's cash conversion cycle reached its highest level at 87.19 days in June 2024, indicating that it took Sally Beauty Holdings Inc almost three months to convert its investments into cash flow. This could suggest issues with inventory management, sales processes, or accounts receivable collection during that period.
On the contrary, the lowest point in the cash conversion cycle was observed at 64.25 days in December 2021, signifying an improvement in the company's efficiency in converting investments into cash flow. A shorter cash conversion cycle is generally seen as a positive indicator, as it indicates that the company is able to generate cash more quickly from its operations.
Overall, a longer cash conversion cycle may tie up working capital and impact the company's liquidity, while a shorter cycle reflects better operational efficiency and cash flow management. It would be beneficial for Sally Beauty Holdings Inc to analyze the factors contributing to the fluctuations in its cash conversion cycle and implement strategies to optimize working capital and enhance cash flow conversion efficiency.
Peer comparison
Sep 30, 2024