Simply Good Foods Co (SMPL)

Cash conversion cycle

		Aug 31, 2024	May 25, 2024	Feb 24, 2024	Nov 25, 2023	Aug 26, 2023	May 27, 2023	Feb 25, 2023	Nov 26, 2022	Aug 27, 2022	May 28, 2022	Feb 26, 2022	Nov 27, 2021	Aug 28, 2021	May 29, 2021	Feb 27, 2021	Nov 28, 2020	Aug 29, 2020	May 30, 2020	Feb 29, 2020	Nov 30, 2019
Days of inventory on hand (DOH)	days	63.27	47.54	52.32	56.36	53.88	50.64	55.14	59.97	62.72	56.49	64.53	65.06	59.21	37.95	46.14	46.67	43.81	70.41	73.61	100.91
Days of sales outstanding (DSO)	days	41.31	42.64	43.42	40.52	43.68	45.46	46.57	49.72	42.22	47.26	39.42	44.55	41.77	45.75	40.20	40.27	40.11	32.06	49.91	45.80
Number of days of payables	days	26.07	25.36	25.12	19.79	24.36	22.03	28.73	26.69	31.07	32.73	34.79	25.93	36.35	22.59	24.30	25.40	23.90	24.41	35.18	38.42
Cash conversion cycle	days	78.51	64.82	70.62	77.09	73.20	74.07	72.98	83.00	73.87	71.02	69.16	83.68	64.63	61.10	62.04	61.53	60.01	78.06	88.34	108.29

August 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 63.27 + 41.31 – 26.07
= 78.51

The cash conversion cycle of Simply Good Foods Co fluctuated over the past several periods, indicating variations in the efficiency of its working capital management. The cycle represents the time it takes for the company to convert its resources invested in inventory and accounts receivable into cash flows from sales.

The cash conversion cycle ranged from a low of 60.01 days to a high of 108.29 days over the examined periods. A lower cash conversion cycle suggests that the company is able to manage its inventory and accounts receivable efficiently, resulting in quicker cash inflows from sales. Conversely, a higher cycle indicates potential inefficiencies in the management of working capital, leading to delays in cash collections.

It is notable that the company experienced the highest cash conversion cycle of 108.29 days in the period ending November 30, 2019, which may indicate extended periods required to convert inventory and accounts receivable into cash during that time.

Overall, monitoring the cash conversion cycle can provide insights into Simply Good Foods Co's operational efficiency and effectiveness in managing working capital to maintain healthy cash flows. fluctuations in the cycle should be carefully analyzed to identify potential areas for improvement in working capital management.