Simply Good Foods Co (SMPL)

Number of days of payables

		Aug 26, 2023	Aug 27, 2022	Aug 28, 2021	Aug 29, 2020	Aug 31, 2019
Payables turnover		14.97	11.64	9.98	15.27	19.46
Number of days of payables	days	24.38	31.37	36.58	23.90	18.76

August 26, 2023 calculation

Number of days of payables = 365 ÷ Payables turnover
= 365 ÷ 14.97
= 24.38

The number of days of payables is a financial ratio that measures the average number of days it takes a company to pay its suppliers or trade payables. It is calculated by dividing the accounts payable by the cost of sales and then multiplying by the number of days in the period. A low number of days of payables indicates that the company takes fewer days to pay its suppliers, while a high number suggests a longer period before settling its payables.

Looking at the historical data for Simply Good Foods Co's number of days of payables, there are some notable trends over the past five years:

Aug 26, 2023: 24.38 days
Aug 27, 2022: 31.37 days
Aug 28, 2021: 36.58 days
Aug 29, 2020: 23.90 days
Aug 31, 2019: 18.76 days

The trend in the number of days of payables shows some variability over the years. In 2019, the company had a relatively low number of days of payables at 18.76, indicating that it took approximately 18.76 days to pay its suppliers. This figure increased to 23.90 days in 2020, suggestive of a slightly longer period for settling payables. However, the number decreased to 24.38 days in 2023, indicating an improvement in the efficiency of paying off suppliers.

Comparing the most recent data to the previous years, it is evident that the company has effectively managed to reduce the average number of days it takes to pay its suppliers. This can be indicative of improved cash management and working capital practices. However, it is important to examine the company's payment terms with its suppliers and industry benchmarks to gain deeper insights into the efficiency of its payables management.

In conclusion, Simply Good Foods Co's number of days of payables has shown fluctuations over the past five years, with a recent improvement in the efficiency of paying its suppliers. This trend suggests that the company may have enhanced its working capital management, but further analysis is required to assess the impact of this ratio on its overall financial performance.