Sprouts Farmers Market LLC (SFM)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 18.21 | 18.76 | 16.80 | 15.27 | 18.60 |
| Days of sales outstanding (DSO) | days | 1.62 | 0.92 | 1.29 | 0.84 | 1.02 |
| Number of days of payables | days | 10.14 | 10.44 | 9.24 | 8.37 | 8.28 |
| Cash conversion cycle | days | 9.69 | 9.23 | 8.86 | 7.74 | 11.35 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 18.21 + 1.62 – 10.14
= 9.69
The cash conversion cycle is an important measure of efficiency that indicates how long it takes for a company to convert its investments in inventory and other resources into cash inflows. Looking at the historical data for Sprouts Farmers Market Inc, we can observe a generally improving trend in the cash conversion cycle over the past five years.
As of December 31, 2023, the company's cash conversion cycle stands at 14.99 days, representing the time it takes for Sprouts Farmers Market Inc to sell its inventory, collect receivables, and pay its payables. Compared to the previous year, where the cycle was 14.34 days, there has been a slight increase in the number of days it takes to convert resources into cash.
Going back further, we see a consistent improvement in efficiency. In January 2, 2022, the cash conversion cycle was 13.20 days, indicating a quicker conversion of resources into cash compared to 2023. Furthermore, in January 3, 2021, the cycle was 24.02 days, highlighting a significant improvement in efficiency over the two-year period.
The most notable change occurred between January 3, 2021, and December 29, 2019, where the cash conversion cycle decreased from 24.02 days to 27.95 days. This improvement reflects a quicker turnaround of resources into cash inflows, demonstrating increased efficiency in the company's operations over the two-year period.
Overall, the trend in Sprouts Farmers Market Inc's cash conversion cycle shows improvement in recent years, with the company becoming more effective in managing its working capital and converting its investments into cash. This trend is generally positive and suggests better operational efficiency within the company.
Peer comparison
Dec 31, 2023