Starbucks Corporation (SBUX)
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 | 48.19 | 50.46 | 65.66 | 54.01 | 57.90 |
| Days of sales outstanding (DSO) | days | 12.25 | 12.01 | 13.62 | 12.07 | 19.69 |
| Number of days of payables | days | 43.26 | 43.14 | 43.48 | 40.80 | 37.24 |
| Cash conversion cycle | days | 17.18 | 19.33 | 35.79 | 25.28 | 40.35 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 48.19 + 12.25 – 43.26
= 17.18
The cash conversion cycle of Starbucks Corporation has shown a fluctuating trend over the past five years. In the most recent fiscal year ending on September 30, 2024, Starbucks recorded a cash conversion cycle of 17.18 days, indicating an improvement from the previous year. This signifies the company’s ability to efficiently manage its working capital components.
Comparing this to the data from the previous years, we observe a gradual decrease in the cash conversion cycle over the past five years, indicating an overall improvement in the company's operational efficiency in converting its investments in inventory and receivables into cash.
The reduction in the cash conversion cycle suggests that Starbucks has been able to streamline its operations, manage its inventory levels, and collect receivables more effectively. This is a positive sign as it implies that the company is able to generate cash flows at a faster rate.
Overall, the decreasing trend in the cash conversion cycle reflects Starbucks Corporation's efforts towards optimizing its working capital management, which is essential for maintaining liquidity and sustaining business operations effectively.
Peer comparison
Sep 30, 2024