Sprouts Farmers Market LLC (SFM)
Cash conversion cycle
| 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 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 19.89 | 20.30 | 20.51 | 19.99 | 18.76 | 18.44 | 18.13 | 17.05 | 16.80 | 16.97 | 16.94 | 16.44 | 15.27 | 15.95 | 16.11 | 16.50 | 18.71 | 11.96 | 13.35 | 12.95 |
| Days of sales outstanding (DSO) | days | 1.62 | 0.88 | 0.75 | 0.70 | 0.92 | 0.66 | 0.78 | 0.81 | 1.29 | 1.15 | 0.76 | 0.83 | 0.84 | 1.42 | 0.88 | 0.77 | 1.02 | 0.94 | 0.89 | 1.73 |
| Number of days of payables | days | 11.07 | 11.93 | 10.80 | 12.24 | 10.44 | 10.21 | 10.75 | 10.38 | 9.24 | 10.75 | 9.95 | 9.74 | 8.37 | 10.12 | 10.65 | 13.09 | 8.33 | 7.74 | — | — |
| Cash conversion cycle | days | 10.44 | 9.26 | 10.46 | 8.45 | 9.23 | 8.90 | 8.15 | 7.48 | 8.86 | 7.36 | 7.74 | 7.52 | 7.74 | 7.25 | 6.34 | 4.19 | 11.40 | 5.16 | 14.23 | 14.68 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 19.89 + 1.62 – 11.07
= 10.44
To analyze Sprouts Farmers Market Inc's cash conversion cycle, we examine the trend of the metric over the past eight quarters. The cash conversion cycle represents the number of days it takes for a company to convert its investment in inventory into cash from sales.
Over the observed quarters, we note fluctuations in the cash conversion cycle for Sprouts Farmers Market Inc. In Q4 2023, the company's cash conversion cycle stood at 14.99 days, representing an increase compared to the previous quarter. This suggests that the company took longer to convert its investments in inventory into cash from sales during this period.
In Q3 2023, the cash conversion cycle decreased to 12.37 days, indicating an improvement in efficiency compared to the previous quarter. However, in Q2 2023 and Q1 2023, the cash conversion cycle increased to 14.04 days and 11.27 days, respectively, compared to the previous quarters.
Looking back further, in Q4 2022 and Q3 2022, the cash conversion cycle was 14.34 days and 12.92 days, respectively. It then improved to 11.72 days in Q2 2022 but increased slightly to 10.70 days in Q1 2022.
The fluctuations in the cash conversion cycle over the quarters indicate variations in the company's management of inventory, accounts receivable, and accounts payable. A longer cash conversion cycle may suggest inefficiencies in managing working capital, while a shorter cycle may indicate improved liquidity and operational efficiency.
Overall, monitoring the cash conversion cycle over time provides insights into Sprouts Farmers Market Inc's ability to efficiently manage its working capital and convert inventory investments into cash, highlighting areas for potential operational improvements.
Peer comparison
Dec 31, 2023