Sprouts Farmers Market LLC (SFM)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 26.23 | 27.34 | 27.95 | 24.90 | 22.69 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 26.23 | 27.34 | 27.95 | 24.90 | 22.69 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 26.23 + — – —
= 26.23
The cash conversion cycle of Sprouts Farmers Market LLC has shown a gradual increase over the five-year period from December 31, 2020, to December 31, 2024. Starting at 22.69 days in 2020, it rose to 26.23 days by the end of 2024. This indicates that the company is taking longer to convert its investments in inventory into cash receipts from sales.
The increasing trend suggests potential inefficiencies in the company's inventory management and accounts receivable collection processes. A longer cash conversion cycle can tie up cash resources and impact liquidity, as the company needs to finance its operations while waiting for payments from customers.
It is essential for Sprouts Farmers Market LLC to closely monitor and improve its inventory turnover and accounts receivable collection to shorten its cash conversion cycle. This can help enhance cash flow, reduce working capital requirements, and improve overall financial performance in the long run.
Peer comparison
Dec 31, 2024