Texas Roadhouse Inc (TXRH)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	3.37	3.87	3.77	7.72	6.60
Days of sales outstanding (DSO)	days	13.84	13.68	17.02	15.00	13.18
Number of days of payables	days	11.56	10.75	11.35	23.12	20.07
Cash conversion cycle	days	5.65	6.80	9.43	-0.40	-0.29

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 3.37 + 13.84 – 11.56
= 5.65

The cash conversion cycle of Texas Roadhouse Inc has shown variability over the past five years. In 2023, the company's cash conversion cycle was 5.65 days, indicating that it takes approximately 5.65 days for Texas Roadhouse to convert its investments in inventory and other resources into cash from sales. This represents an improvement from the previous year when the cycle was 6.80 days.

In 2021, the cash conversion cycle increased significantly to 9.43 days, indicating that the company took longer to convert its resources into cash compared to previous years. The negative cash conversion cycles in 2020 and 2019 suggest that Texas Roadhouse was able to generate cash from its operating cycle faster than it needed to pay its suppliers and vendors during those years.

Overall, a lower cash conversion cycle is generally seen as positive as it signifies that the company is efficient in managing its working capital. It is important for Texas Roadhouse to continue monitoring and managing its cash conversion cycle effectively to ensure optimal utilization of its resources and maintain a healthy financial position.