JM Smucker Company (SJM)
Cash conversion cycle
| Apr 30, 2025 | Apr 30, 2024 | Apr 30, 2023 | Apr 30, 2022 | Apr 30, 2021 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 82.64 | 74.89 | 64.35 | 75.04 | 72.03 |
| Days of sales outstanding (DSO) | days | 25.89 | 32.87 | 25.57 | 23.94 | 24.34 |
| Number of days of payables | days | 88.06 | 96.32 | 88.75 | 82.21 | 77.60 |
| Cash conversion cycle | days | 20.47 | 11.44 | 1.18 | 16.78 | 18.77 |
April 30, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 82.64 + 25.89 – 88.06
= 20.47
The analysis of JM Smucker Company's cash conversion cycle (CCC) from April 30, 2021, through April 30, 2025, reveals notable fluctuations over the observed period. At the end of fiscal year 2021, the CCC was 18.77 days, indicating the company's average period to convert its investments in inventory and receivables into cash was just over 18 days. This figure decreased to 16.78 days by April 2022, suggesting slight improvements in operational efficiency.
A more significant change is observed by April 2023, when the CCC sharply declined to 1.18 days. This near-zero value indicates an extremely efficient cash conversion cycle, reflecting rapid inventory turnover and swift collection of receivables relative to purchase and production cycles. This could be attributed to enhanced operational efficiencies, improvements in supply chain management, or changes in receivables and inventory management policies.
However, by April 2024, the CCC increased again to 11.44 days, signaling a moderate slowdown in the cash conversion process. This may be due to extended inventory holding periods, delayed receivables, or changes in supplier or customer payment terms. The cycle lengthened further to 20.47 days by April 2025, exceeding the initial levels seen in 2021. This upward trend suggests a deterioration in liquidity management or operational efficiency, possibly influenced by external market conditions, strategic shifts, or other operational factors.
Overall, the company's cash conversion cycle has experienced significant variability over the four-year period, with a peak of near-zero days in 2023 followed by a gradual elongation in subsequent years. The fluctuating CCC reflects evolving operational efficiencies and financial strategies, underscoring the importance of consistent cash flow management to maintain optimal liquidity levels.