Scotts Miracle-Gro Company (SMG)
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 | 123.88 | 90.70 | 94.56 | 100.76 | 130.84 | 113.97 | 115.83 | 143.08 | 145.06 | 96.24 | 80.22 | 87.16 | 99.98 | 62.67 | 54.70 | 90.22 | 109.87 | 69.72 | 68.35 | 90.10 |
| Days of sales outstanding (DSO) | days | 31.77 | 32.46 | 73.91 | — | 30.34 | 28.68 | 60.76 | 80.56 | 24.42 | 36.49 | 76.92 | 91.56 | 28.40 | 42.59 | 96.32 | 108.44 | 22.34 | 26.57 | 47.96 | 89.94 |
| Number of days of payables | days | 35.22 | 27.94 | 39.08 | 37.13 | 31.45 | 35.85 | 23.95 | 45.55 | 37.44 | 52.06 | 38.99 | 47.03 | 46.69 | 39.40 | 34.44 | 39.41 | 39.25 | 27.64 | 28.51 | 39.85 |
| Cash conversion cycle | days | 120.44 | 95.22 | 129.39 | 63.63 | 129.73 | 106.81 | 152.64 | 178.09 | 132.04 | 80.67 | 118.16 | 131.69 | 81.69 | 65.86 | 116.58 | 159.25 | 92.96 | 68.65 | 87.80 | 140.18 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 123.88 + 31.77 – 35.22
= 120.44
The cash conversion cycle measures how long it takes a company to convert its investments in inventory and other resources into cash flows from sales. In the case of Scotts Miracle-Gro Company, the cash conversion cycle has varied over the past years, indicating fluctuations in the efficiency of its working capital management.
The cash conversion cycle was 120.44 days at the end of December 2023, showing an increase compared to the previous quarter. This suggests that the company took longer to convert its investments into cash during this period. Conversely, in March 2023, the cash conversion cycle was notably lower at 63.63 days, indicating improved efficiency in managing working capital and converting assets into cash.
Looking at the trend over the past few years, we can observe fluctuations in the cash conversion cycle, with some quarters showing longer cycles (e.g., 152.64 days in June 2022 and 178.09 days in March 2022) and others shorter cycles (e.g., 65.86 days in June 2020 and 68.65 days in March 2020). Overall, a shorter cash conversion cycle is generally favorable as it indicates that the company is efficiently managing its working capital and generating cash from its operations more quickly.
Analyzing the cash conversion cycle alongside other financial metrics and operational factors can provide a comprehensive view of Scotts Miracle-Gro Company's liquidity, efficiency, and overall financial performance.
Peer comparison
Dec 31, 2023