Sonos Inc (SONO)
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 | 91.39 | 117.71 | 50.61 | 55.97 | 74.01 |
| Days of sales outstanding (DSO) | days | 14.84 | 21.22 | 21.43 | 15.14 | 29.92 |
| Number of days of payables | days | 49.57 | 87.00 | 58.77 | 77.47 | 84.84 |
| Cash conversion cycle | days | 56.65 | 51.93 | 13.27 | -6.37 | 19.09 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 91.39 + 14.84 – 49.57
= 56.65
The cash conversion cycle (CCC) is an important measure of a company's efficiency in managing its working capital, specifically in terms of how long it takes for the company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle generally indicates that a company is able to more efficiently generate cash from its operations.
Based on the data provided, Sonos Inc's cash conversion cycle has fluctuated significantly over the past five years. In 2023, the company's cash conversion cycle stood at 76.54 days, which indicates an increase compared to the prior year. This could suggest that Sonos Inc took longer to convert its resources into cash from sales, potentially indicating inefficiencies in its working capital management.
In 2022, the cash conversion cycle was 66.34 days, also showing an increase compared to the substantial improvement seen in 2021, when the cycle was only 9.40 days. The negative cash conversion cycle in 2020, indicating a time period where the company was able to convert its investments into cash before paying its suppliers, reflects very efficient working capital management. This suggests that Sonos Inc was able to collect cash from its sales before needing to pay for its inventory and other expenses.
However, in 2019, the cash conversion cycle was 13.74 days, which still indicated efficient working capital management, though not as exceptional as the negative cycle in 2020.
Overall, the fluctuating trend in Sonos Inc's cash conversion cycle over the past five years indicates variations in the company's efficiency in managing its working capital. It is important for the company to closely monitor and manage its cash conversion cycle to ensure optimal working capital efficiency and liquidity.
Peer comparison
Sep 30, 2023