Simply Good Foods Co (SMPL)

Cash conversion cycle

		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	Aug 31, 2019	May 25, 2019
Days of inventory on hand (DOH)	days	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	45.42	52.68
Days of sales outstanding (DSO)	days	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	30.83	31.70
Number of days of payables	days	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	18.76	21.95
Cash conversion cycle	days	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	57.49	62.43

February 24, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 52.32 + 43.42 – 25.12
= 70.62

The cash conversion cycle for Simply Good Foods Co has fluctuated over the past 20 quarters, ranging from a low of 57.49 days to a high of 108.29 days. The average cash conversion cycle over this period is approximately 71.73 days.

A lower cash conversion cycle indicates that the company is able to convert its inventory into cash more quickly, which may be a positive sign of efficiency in managing its working capital. Conversely, a higher cash conversion cycle suggests that the company takes longer to convert its investments in inventory and accounts receivable into cash, potentially indicating inefficiencies or challenges in managing its liquidity.

It is important for Simply Good Foods Co to closely monitor and analyze its cash conversion cycle over time to ensure optimal working capital management and liquidity. By identifying trends and fluctuations in the cash conversion cycle, the company can strategically adjust its operations to improve cash flow and overall financial performance.