Scotts Miracle-Gro Company (SMG)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 88.45 | 113.98 | 96.24 | 62.67 | 69.72 |
| Days of sales outstanding (DSO) | days | 32.93 | 28.68 | 36.49 | 42.78 | 24.65 |
| Number of days of payables | days | 27.25 | 35.85 | 52.06 | 39.40 | 27.64 |
| Cash conversion cycle | days | 94.13 | 106.81 | 80.67 | 66.05 | 66.73 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 88.45 + 32.93 – 27.25
= 94.13
The cash conversion cycle (CCC) measures the number of days it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Looking at the trend for Scotts Miracle-Gro Company over the past five years, the CCC has fluctuated significantly.
In 2023, the CCC decreased to 113.35 days from 151.50 days in 2022. This suggests that the company took less time to convert its investments in inventory into sales and subsequently into cash. However, it is important to note that the CCC is still higher than in 2021, signifying a longer operating cycle.
In 2021, the company experienced a higher CCC of 90.84 days compared to 74.36 days in 2020. This increase indicates that Scotts Miracle-Gro Company took longer to convert its resources into cash during 2021 compared to the previous year.
The relatively higher CCC in 2020 and 2022, as well as the notable decrease in 2023, may indicate inefficiencies in inventory management and sales collection. The company may need to streamline its processes to reduce the time taken to convert inventory into sales and improve the collection of cash from customers.
Overall, the trend in Scotts Miracle-Gro Company's CCC suggests that the company has experienced fluctuations in its efficiency in managing cash flows and resources. It would be beneficial for the company to focus on optimizing its inventory management and collection processes to improve its cash conversion cycle in the future.
Peer comparison
Sep 30, 2023