Wingstop Inc (WING)

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	1.05	77.88	73.79	94.07	1.07	—	—	—	1.44	82.29	76.47	81.09	1.21	75.21	41.05	53.70	1.14	51.38	29.92	62.67
Days of sales outstanding (DSO)	days	9.84	9.96	9.49	—	9.66	9.93	8.87	8.09	10.48	8.07	7.86	8.22	7.23	8.22	9.07	9.06	9.46	11.44	11.55	10.96
Number of days of payables	days	9.26	10.74	13.51	16.10	14.36	9.81	8.91	13.92	16.12	12.67	11.12	11.02	11.14	7.65	9.89	13.62	12.12	9.10	10.35	9.64
Cash conversion cycle	days	1.63	77.10	69.77	77.96	-3.63	0.11	-0.04	-5.83	-4.20	77.69	73.21	78.30	-2.70	75.79	40.23	49.14	-1.52	53.71	31.12	63.98

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 1.05 + 9.84 – 9.26
= 1.63

The cash conversion cycle of Wingstop Inc has shown fluctuations over the periods analyzed. A shorter cash conversion cycle indicates that the company is efficiently managing its working capital. The negative values observed in some quarters suggest that Wingstop is able to convert its inventory into cash and collect receivables more quickly than paying its payables.

However, significant spikes in the cash conversion cycle in some quarters, such as in Sep 30, 2023, indicate potential issues with managing working capital efficiently during those periods. It is important for Wingstop to closely monitor and improve its inventory turnover, accounts receivable collection, and accounts payable payment processes to reduce the time it takes to convert sales into cash.

Overall, analyzing the cash conversion cycle provides insights into the company's liquidity and operational efficiency, highlighting areas where improvements can be made to optimize working capital management and enhance overall financial performance.