Texas Roadhouse Inc (TXRH)
Cash conversion cycle
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 3.37 | 3.32 | 3.57 | 3.57 | 3.87 | 2.53 | 2.77 | 3.02 | 3.77 | 8.01 | 7.93 | 7.92 | 7.72 | 6.69 | 7.70 | 6.52 | 6.60 | 5.81 | 6.17 | 7.71 |
| Days of sales outstanding (DSO) | days | 13.83 | 4.00 | 5.09 | 3.61 | 13.67 | 3.54 | 4.40 | 4.52 | 17.01 | 5.96 | 5.98 | 5.41 | 14.99 | 4.70 | 4.42 | 3.42 | 13.16 | 4.70 | 5.58 | 5.03 |
| Number of days of payables | days | 11.56 | 11.47 | 11.31 | 11.05 | 10.75 | 7.58 | 8.83 | 10.08 | 11.35 | 23.19 | 27.62 | 29.19 | 23.12 | 22.13 | 21.12 | 13.80 | 20.07 | 20.09 | 22.66 | 28.79 |
| Cash conversion cycle | days | 5.64 | -4.15 | -2.65 | -3.87 | 6.80 | -1.52 | -1.67 | -2.53 | 9.42 | -9.22 | -13.71 | -15.86 | -0.41 | -10.74 | -9.00 | -3.86 | -0.32 | -9.58 | -10.91 | -16.06 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 3.37 + 13.83 – 11.56
= 5.64
The cash conversion cycle measures how long it takes for a company to convert its investment in inventory and other resources into cash flow from sales. A negative cash conversion cycle indicates that the company is able to generate cash from sales before having to pay its suppliers, which is generally a positive sign.
Looking at the data for Texas Roadhouse Inc over the past few quarters, we observe fluctuations in the cash conversion cycle. In the most recent quarter of December 31, 2023, the company's cash conversion cycle stands at 5.64 days, indicating that it takes approximately 5.64 days to convert its investments in inventory to cash from sales. This represents an improvement compared to the previous quarter where the cycle was negative (-4.15 days) which suggests the company is efficiently managing its working capital.
However, the company's performance has been inconsistent as there are quarters with negative cash conversion cycles such as September 30, 2023, June 30, 2023, and so on. This variability could be due to factors such as seasonal fluctuations in sales, changes in inventory management, or shifts in payment terms with suppliers and customers.
It is crucial for Texas Roadhouse Inc to closely monitor and manage its cash conversion cycle to ensure efficient use of resources and maximize cash flow. By optimizing inventory levels, streamlining operations, and negotiating favorable payment terms, the company can potentially improve its working capital efficiency and overall financial health.
Peer comparison
Dec 31, 2023